Rising mortgage rates are starting to hit house prices in some of Britain’s cheapest regions. Sellers are cutting asking prices as buyers struggle with higher borrowing costs.
Rightmove’s latest House Price Index shows that average asking prices rose 1% (£3,575) this month to £371,015.
However, prices remain 0.1% below a year ago. Higher mortgage costs are also putting increasing pressure on buyers’ budgets.
The average two-year fixed mortgage rate has climbed to 5.55%, up from 5.29% last month. It stood at 4.25% before the war in Iran began in February.
According to Rightmove, the increase has added around £250 a month to the cost of a typical new mortgage.
The impact is now becoming more apparent in regions that had previously resisted downward pressure on prices.
New sellers in four of Britain’s five cheapest regions have reduced their asking prices this month.
The North East recorded the largest fall at 2%, followed by Scotland at 1.9%. Asking prices also declined in the North West (-0.6%) and Wales (-0.3%).
Yorkshire and the Humber was the exception, recording a modest 0.3% increase.
Colleen Babcock, Rightmove’s property expert, said: “The rapid rise in mortgage rates is really beginning to hit buyers’ budgets. We’re now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain, where prices had been more resilient this year.
“It’s an early sign that higher mortgage costs are putting pressure on affordability even in markets with lower property prices, affecting the areas and types of property that buyers can afford.”
She added: “This is a stark reminder of how price-sensitive the market is, and the message from agents, backed up by our data, remains the same – that competitive pricing from day one of marketing is critical to capitalise on initial buyer interest.”
London prices rebound – but sales remain sluggish
London recorded Britain’s largest monthly asking price increase, rising 2.5% in October.
However, the increase follows a weak summer, when prices fell 6% across July and August.
Despite the latest rebound, asking prices in the capital remain 1.7% below October 2025.
Inner London recorded a 3.9% monthly increase, helping lift the overall London figure.
Rightmove suggests the rise partly reflects seasonal activity. Some sellers delayed their listings until autumn.
However, other indicators point to continued weakness in the capital’s housing market.
Some 38% of London properties have had their asking prices reduced. Homes also take an average of 78 days to find a buyer.
Just 42% of listed properties successfully secure a buyer.
The figures suggest October’s price increase reflects stronger seller expectations rather than a wider market recovery.
Sales agreed fall as buyer enquiries decline
Across Britain, the number of sales agreed is 8% below the same period last year.
Buyer enquiries have also fallen. The number of prospective purchasers contacting agents is down 9% year-on-year.
Meanwhile, new listings have increased by 3%.
The number of homes for sale is now at its highest level for this time of year since 2014. This is adding to competition between sellers.
Despite the slowdown, Rightmove says sales activity remains broadly in line with the year-to-date trend.
Buyers are still proceeding where properties are priced competitively. However, higher borrowing costs continue to restrict demand.
Budget uncertainty adds to market pressures
The forthcoming Budget is creating further uncertainty for buyers and sellers.
Financial markets will be watching for announcements affecting inflation, government borrowing and interest rates.
Some first-time buyers may also delay decisions while awaiting details of the government’s proposed Your First Home scheme.
The scheme aims to help buyers purchase new-build properties.
Other households will be assessing how Budget measures could affect their finances.
Babcock said: “Higher mortgage rates are putting pressure on affordability across Great Britain, but sellers appear to be responding in different ways. Some have room to lower their expectations, while others need to hold firm on price to make their next move add up, even if that means waiting longer for a buyer.”
She added: “In such a price-sensitive market, the guidance and expertise of a local agent are paramount. The forthcoming Budget adds some uncertainty too, with financial markets hoping that will improve the outlook for interest rates, while potential home-movers will be waiting to see how they are directly or indirectly affected.”
