House prices fell in March as homeowners felt mortgage rate pain
- House prices fell 0.5% in March, according to Halifax
The value of a typical house fell by £1,374 last month as mortgage rates rose due to the uncertainty of war in Iran.
House prices fell 0.5 per cent in March, the mortgage lender said, according to the latest figures from Halifax. This follows a 0.3 percent monthly increase in February.
This means the average house is now worth £299,677, having fallen below the £300,000 level reached at the beginning of the year.
Compared to March 2025, prices increased by 0.8 percent.
Halifax mortgage manager Amanda Bryden said the ‘slowdown’ in the housing market was due to uncertainty about the conflict in the Middle East.
Concerns about high energy prices have increased, he said. inflation led to increased expectations mortgage ratesby reducing trust interest rates will be cut this year, weakening the initial momentum seen in the market at the beginning of this year.’
Since the beginning of March, banks and construction cooperatives have increased housing loan interest rates.
The lowest fixed-rate deals went from around 3.5 percent to around 4.75 percent in a matter of weeks.
If a £200,000 mortgage is repaid over 25 years, this could be the difference between paying £1,002 and £1,140 a month.
Bryden added: ‘The impact on house prices will depend largely on how long these pressures last and their wider impact on the economy and unemployment.’
Jonathan Hopper, buying agent and managing director of Garrington Property Finders, said: ‘The rise in the cost of fixed-rate mortgages over the past month has cooled buyer demand, as has the general sense of uncertainty caused by the war.’
Will the ceasefire reduce mortgage rates?
This uncertainty continues despite Donald Trump’s announcement last night that Iran and the United States have agreed to a two-week ceasefire that will open the Strait of Hormuz.
As a result, the price of oil fell below $100 per barrel and stock markets around the world soared.
Mortgage rates could fall if the conflict eases, but that will take some time.
Tom Bill, of estate agent Knight Frank, said: ‘What goes up must come down, but even if the two-week ceasefire agreement holds the fall in mortgage rates will be more gradual than the sharp rise triggered by the Middle East conflict.
‘Housing market sentiment will improve if the fighting stops, but the long-term inflationary impact of this and weakening demand for UK government debt due to tight fiscal space and the apparent inability to cut spending means mortgage rates will not return to February levels.
‘This will keep demand and house prices in check this year.’
