Bank Rate vs. swap rates — 12-month view.
Bank Rate per Bank of England MPC decisions. 2-year and 5-year SONIA swap rates shown are indicative monthly averages drawn from market commentary, used here to illustrate the shape of the curve rather than to quote dealable pricing — fixed mortgage rates are priced from swaps plus lender margin, not from Bank Rate directly.
This month’s headlines.
- Bank of England holds Bank Rate at 3.75% for a fourth consecutive meeting, but the 7–2 MPC vote was the closest split in months, with two members pushing for a hike to 4%.
- Mortgage approvals collapse 14.9% in May to 56,205 — the lowest reading since December 2023 — as the Middle East conflict and higher borrowing costs cool buyer activity.
- Rightmove records the steepest June asking-price fall in 14 years, down 0.6% to £376,191, as record stock levels hand bargaining power to buyers.
- Halifax and Nationwide both report prices easing on the month (−0.1% and −0.6% respectively) while annual growth stays modestly positive at +0.5% and +1.7%.
- RICS surveyors report a sixth straight month of negative sentiment, though the headline price balance has stabilised at −35% rather than deteriorating further.
- Lenders including NatWest, Barclays, TSB, Santander, Nationwide and Halifax trim fixed rates through June even as Bank Rate stays put, taking the average 2-year fix below 5.7% for the first time since April.
- Housebuilder shares stage a sharp rally mid-month after ONS data showed annual house price growth jumping to 3.8%, with Vistry and Persimmon among the standout movers.
The numbers at a glance.
Index by index: what’s behind the numbers.
RICS House Price Index
Surveyors’ headline price balance held at −35% in May, unchanged from April and the joint-weakest reading of the year, but notably no worse than the previous month. New buyer enquiries were similarly stuck at −34%, and agreed sales held at −37%, suggesting the post-conflict deterioration in sentiment may finally be levelling off rather than continuing to slide. The time it takes to get a sale from listing to completion stretched to 21.5 weeks, the longest since RICS began collecting the data in 2017, a sign that even motivated buyers and sellers are taking longer to commit. RICS’ own economist struck a cautious tone, noting that while the cooling in CPI inflation to 2.8% in April offered brief relief, the Bank of England’s own warning that energy-driven inflation could still climb means it would be premature to call this the start of a recovery. On the lettings side, the picture is firmer: tenant demand is rising while landlord instructions remain deeply negative, pushing rent expectations to their highest level in a year.
Mortgage Approvals
Net mortgage approvals for house purchase fell sharply to 56,205 in May, down 14.9% from April’s 66,034 and 10.8% lower than a year earlier — the weakest reading since December 2023 and well below the six-month average of 63,300. Remortgage approvals fell even harder, dropping from 51,200 to 33,300. Net mortgage lending, which lags approvals and reflects completed purchases, slipped to £2.9bn from £4.4bn in April. Economists polled ahead of the release had expected a far smaller fall to around 62,900, making this one of the bigger downside surprises of the year. The read-across is straightforward: the spike in borrowing costs that followed the escalation in the Middle East in late February has now fully worked its way through into completed and pending mortgage applications. Encouragingly, the effective rate on newly drawn mortgages has started to ease back from its spring peak as lenders compete harder on fixed pricing, which should feed through to firmer approval numbers over the summer if swap rates hold steady.
Rightmove Asking Price Index
Average asking prices for newly listed homes fell 0.6% (−£2,113) to £376,191 in June — the biggest June fall Rightmove has recorded in fourteen years, against a typical seasonal rise of around 0.1%. Prices are now 0.5% below where they stood a year ago. Rightmove points to a combination of factors rather than a single shock: a record number of homes on the market for this time of year, a more price-sensitive buyer pool, and an unusually early summer slowdown pulled forward by the late-May bank holiday, a heatwave, and the football World Cup distracting would-be movers. Scotland (+0.8%) and London bucked the trend and posted gains, while Wales saw the weakest performance, down 1.6% on the month. Encouragingly for affordability, the average two-year fixed mortgage rate has eased to 5.07% from 5.18%, trimming roughly £30 a month off the typical repayment, and Rightmove’s own data shows sales volumes holding broadly steady even as prices soften — this looks like a market resetting expectations rather than one in genuine distress.
Halifax House Price Index
Halifax recorded a typical UK property price of £298,806 in May, down a marginal 0.1% on the month — matching April’s fall — but still 0.5% higher than a year ago. Halifax’s Head of Mortgages, Amanda Bryden, was explicit that ongoing uncertainty linked to the Middle East has kept borrowing costs above where they started the year despite recent rate cuts from lenders, continuing to stretch affordability and temper demand. First-time buyer growth is notably softer at just +0.3% annually, underlining how stretched entry-level affordability remains even as some lenders loosen criteria and expand low-deposit ranges. Regionally, the now-familiar north-south divide persists, with Northern Ireland once again recording the strongest annual growth, while several southern regions lag. Halifax’s overall message is one of resilience rather than weakness: transaction volumes, drawn from HMRC data, are holding broadly steady even as price growth flattens.
Nationwide House Price Index
Nationwide reported the UK’s first monthly price fall of 2026, with prices down 0.6% in May on a seasonally adjusted basis, though annual growth remains firmer than Halifax’s reading at +1.7%, leaving the average property at roughly £270,000. Nationwide was candid that some loss of momentum was always likely given the conflict-driven rise in energy prices and market interest rates: consumer confidence, as measured by GfK’s index, fell to its lowest level since late 2023 in April and has only nudged up marginally since. Regionally, Nationwide’s most recent quarterly breakdown shows Northern Ireland (+9.5%) and the North West (+3.3%) leading annual growth, while East Anglia and the Outer South East are the only regions in outright annual decline. Taken together with Halifax, the two major lender indices broadly agree on direction — modest monthly softening, positive but unspectacular annual growth — even if they disagree on magnitude, a reminder that no single index should be read as gospel on its own.
Market-moving news.
Bank of England holds at 3.75% — what it means for your mortgage
The MPC voted 7–2 to hold Bank Rate at its meeting ending 17 June, with two members pushing for a rise to 4% on concern that energy-driven inflation could become entrenched. Inflation held at 2.8% in May, comfortably above the 2% target, and the Bank expects it to drift back above 3% later this year as the knock-on effects of the conflict in the Middle East feed through to bills and pricing. For tracker and standard variable rate borrowers, this hold means no change to your monthly payment — but it is the closeness of the vote, not the outcome, that matters most for the months ahead. If two more members swing towards a hike at the next meeting on 30 July, fixed rate pricing could start moving up again even before any actual increase takes effect, because fixed deals are priced off where the market expects Bank Rate to go, not where it sits today. For now, that has not happened: several major lenders cut fixed pricing through June regardless of the hold, because swap rates — the real driver of fixed mortgage costs — eased slightly as fears of a near-term hike receded. The practical takeaway for anyone with a deal maturing this year is that locking in a rate well ahead of completion, with the option to switch down if pricing improves, remains the sensible way to manage this uncertainty.
Housebuilding and supply: the affordability squeeze hasn’t gone away
Behind this month’s price and approval figures sits a persistent supply story. RICS members continue to flag a shortage of available stock in several regions even as Rightmove reports record listings nationally — a reminder that “stock” is not evenly spread, and that areas with genuine scarcity are still seeing firmer pricing while oversupplied pockets soften. On the build side, housebuilders have flagged low-to-mid single digit build cost inflation for 2026, which limits how far they can discount new-build pricing even in a softer sales market. For mortgage borrowers, the read-across is twofold. First, persistent undersupply is one reason analysts at Goldman Sachs and others still expect house price growth to resume once rate cuts return, supporting the case for buyers not to over-wait the market in search of a bottom. Second, with the government’s housing delivery targets still some way short of where they need to be, expect continued political and lender focus on first-time buyer products — including more flexible affordability assessments and low-deposit ranges — as a way of keeping transaction volumes moving even while headline prices are flat to falling.
Top 5 UK housebuilders — share price & news.
Ranked broadly by market capitalisation. Twelve-month trend lines are indicative, illustrating the shape of the year — for live, dealable prices please check the London Stock Exchange or your trading platform directly.
Persimmon plc LSE: PSN
Persimmon shares jumped close to 4% in mid-June on the back of stronger-than-expected ONS house price data, one of the sector’s bigger single-day moves this month.
Goldman Sachs initiated coverage at “buy” with a 1,446p price target, highlighting Persimmon’s strength in the more resilient Northern regions and its position as the most affordably priced major builder, with average selling prices around 11% below the peer average.
Analysts continue to view Persimmon as one of the clearest bellwethers for national housing demand given its scale and geographic spread.
Barratt Redrow plc LSE: BTRW
Barratt Redrow shares rose around 2.7% on the mid-June rally and were separately upgraded by broker Berenberg later in the month, prompting a further positive reaction in the stock.
Goldman Sachs started coverage at “buy” with a 449p target, citing scale advantages across brands and locations and forecasting volume growth of around 7% a year through FY26–30, ahead of the peer average.
A major shareholder was reported to be pushing the board for a larger share buyback programme during the month.
Taylor Wimpey plc LSE: TW.
Taylor Wimpey shares added around 3.5% during the mid-June sector rally, tracking the broader move higher in housebuilder stocks on stronger ONS price data.
The company has flagged build cost inflation of “low to mid-single digits” for 2026, a margin headwind it will need to manage carefully if pricing stays soft into the autumn.
Still widely regarded as the housebuilder with the broadest exposure to mainstream UK residential demand, making it a key stock to watch for read-through on national buyer sentiment.
Berkeley Group Holdings LSE: BKG
Berkeley shares rose around 1.9% in the mid-June rally, the smallest move among the major builders, consistent with its lower beta to the wider sales market given its focus on complex, large-scale London and South East regeneration schemes.
The group’s longer build-out cycles continue to give it more earnings visibility than volume housebuilders, which has kept the stock relatively more defensive through this year’s swap-rate volatility.
Vistry Group plc LSE: VTY
Vistry led the entire sector higher in mid-June, up over 6% in a single session, the sharpest move of any major builder, as the stock rebounded from a deep year-to-date underperformance following a string of earlier profit warnings.
Goldman Sachs started coverage at “buy” with a 731p target, pointing to Vistry’s position as the UK’s largest affordable housing provider and forecasting revenue growth accelerating toward the top of its 5–8% medium-term target by FY27/28.
Despite the bounce, analysts remain cautious near-term given the company’s recent track record on guidance, and are watching closely for confirmation in the next trading update.
Sources: Bank of England (Monetary Policy Summary, Money & Credit), RICS UK Residential Market Survey, Rightmove House Price Index, Halifax House Price Index (Lloyds Banking Group), Nationwide House Price Index, London Stock Exchange, company announcements and broker research as reported in financial media. Swap rate figures and 12-month housebuilder share trend lines are indicative and intended to illustrate direction of travel rather than to provide dealable prices; always confirm live rates and prices with your adviser or broker before making a decision. This newsletter is provided for general information only and does not constitute financial or investment advice. Your home may be repossessed if you do not keep up repayments on your mortgage.