Bank Rate vs. swap rates — 12-month view.
Bank Rate per BoE MPC decisions. 2-year and 5-year SONIA swap rates are indicative monthly averages drawn from market commentary — fixed mortgage rates are priced off swaps plus lender margin, not Bank Rate directly. Note the sharp swap rate spike in March (Iran conflict), the partial easing that followed, and the renewed spike in late July.
This month’s headlines.
- BoE holds Bank Rate at 3.75% for a fifth consecutive meeting — but the MPC split widened to 6–3, the most hawkish vote since 2023, with three members now calling for an immediate rise to 4%.
- CPI inflation fell to 2.6% in June — below the Bank’s own forecast — as energy prices eased following a partial US–Iran ceasefire, but services inflation remains sticky at 3.6%.
- Mortgage approvals edged up to 58,200 in June from 56,600 in May, though still well below the six-month average. Net lending surged to £7.7bn — but lenders expect demand from home buyers to fall over the summer according to the BoE’s Credit Conditions Survey.
- Rightmove records the steepest July asking-price fall in over a decade — down 1.0% to £372,359, five times the seasonal norm — as the World Cup, three heatwaves and a change of Prime Minister combine to distract buyers.
- Lloyds HPI (rebranded from Halifax) records its first monthly price rise in four months: +0.2% in June to £299,330, with annual growth at +0.6%. Nationwide reports flat month on month but a firmer +2.2% annual rate.
- RICS June survey offers a second consecutive month of cautious improvement: price balance −33%, buyer enquiries best since February at −29%.
- Mortgage rates swung sharply through July — lenders cut rates in early July, then five major lenders including NatWest, Nationwide, Virgin Money, Barclays and Coventry all raised them mid-month as swap rates topped 4% again on renewed Iran tensions. Average 2yr fix ended the month around 5.48%.
- Andy Burnham becomes Prime Minister on 20 July. Angela Rayner returns as Housing Secretary, with Matthew Pennycook retained as Housing and Planning Minister — the industry calls it “welcome continuity.”
- The £4.5bn housebuilder class action is formally filed at the Competition Appeal Tribunal, naming Barratt Redrow, Persimmon, Taylor Wimpey, Berkeley, Bellway, Bloor Homes and Vistry. Shares across the sector are down 25–28% year to date.
- Housebuilders are pulling back on land purchases — Berkeley halted land buying outright; Henry Boot warns plot sales will be “materially below” last year as builders await better visibility on mortgage costs and buyer demand.
- US CPI posted its largest monthly drop since April 2020, falling 0.4% in June to bring the annual rate to 3.5% — easing global inflation fears and giving central banks, including the BoE, some breathing room.
- New mortgage products launched: Leeds Building Society’s 98% LTV deal (£5k deposit), Lloyds/Halifax’s £5k deposit mortgage at 5.89%, and Santander’s Zero Bills mortgage for energy-efficient new-builds.
- Landlord sell-off continues: 9.2% of homes listed for sale in June were previously rented out; the Renters’ Rights Act is adding to pressure on small landlords.
The numbers at a glance.
Index by index: what’s behind the numbers.
RICS House Price Index
The June RICS survey offered a second consecutive month of cautious stabilisation. The headline price balance nudged to −33% from −34% in May, while buyer enquiries improved to −29% — the best reading since February. Near-term sales expectations improved to −16%, up sharply from a March low of −34%, suggesting the market may finally be finding a floor after months of deterioration driven by higher mortgage costs and the Middle East conflict. RICS head of market research Tarrant Parsons noted that the partial US–Iran ceasefire and subsequent easing in oil prices were “a welcome development,” while warning that uncertainty around the inflation and rates outlook continues to weigh on sentiment. The regional picture remains polarised: Scotland, Northern Ireland and the North West continue to hold up relatively well; the South East, South West and East Anglia remain the weakest. On the lettings side, annual rental growth has eased to around 2.1% (Rightmove rental tracker) but tenant demand continues to outpace supply, with rent expectations at a one-year high.
Mortgage Approvals & Lender Sentiment
Net mortgage approvals for house purchase recovered to 58,200 in June from 56,600 in May, but remained below the six-month average of 61,400. Remortgage approvals also nudged up to 34,200 from 33,800. Net mortgage lending surged to £7.7bn — more than double May’s £3.3bn and above the six-month average of £4.9bn — largely reflecting completions on deals agreed when conditions were briefly more favourable earlier in the year. The effective rate on newly drawn mortgages rose to 4.35% from 4.22%, confirming that higher borrowing costs are still feeding through into actual lending terms. However, the BoE’s separate Credit Conditions Survey (Q2 2026, covering the three months to end-May) painted a more cautious forward picture: while mortgage availability is expected to increase over the summer, lenders told the Bank that demand for mortgages from house buyers — which increased in Q2 — is expected to decrease in the three months to end-August. Karim Haji at KPMG noted that while major lenders cut rates and oil prices eased in early July, “the outlook for Q3 remains volatile” given stubborn services inflation, lingering energy cost pressures and weak consumer confidence. Mortgage default rates have also started to edge higher, reaching 6.2% in Q1 2026.
What this means for borrowers
Despite the headline improvement in approvals, both lender surveys and the actual rate data point to a more difficult second half of the summer. With three MPC members now voting for a hike, lenders may become more cautious on pricing and criteria heading into September. Anyone considering remortgaging or purchasing should review their position now rather than waiting.
Rightmove Asking Price Index
Average asking prices for newly listed homes fell 1.0% (−£3,832) to £372,359 in July — the biggest July fall Rightmove has recorded in more than a decade, against a typical seasonal dip of just 0.2%. The portal attributed the outsized fall to a perfect storm of demand-suppressing factors: three successive heatwaves each dampened buyer activity by 4–8%; the football World Cup diverted attention; stock levels remained near a 12-year high for the time of year; and a change of Prime Minister introduced political uncertainty mid-month. Geographically, London fell hardest at −1.6%; the North East fell −2.0%; only Yorkshire and the Humber, the North West and Wales eked out small monthly gains. Sales activity was 6% below last year’s levels but level with 2024 — the market is functioning at a lower base rather than in genuine freefall. Rightmove used Burnham’s arrival to call explicitly for housing policy reform, particularly around stamp duty and planning. Separately, Rightmove data shows renting has become cheaper than buying across much of the UK — though the Renters’ Rights Act is tightening rental supply, keeping a floor under rents in many areas.
Lloyds House Price Index
A rebrand first: the Halifax House Price Index is now the Lloyds House Price Index from July 2026. The methodology is unchanged — it still draws on Lloyds and Halifax mortgage approval data. On the data: prices rose +0.2% in June, the first monthly increase in four months, taking the average to £299,330. Annual growth edged to +0.6%. Lloyds described recent price trends as reflecting “wider economic uncertainty, including the impact of global events on inflation and interest rate expectations,” while noting mortgage rates have “eased from their recent highs, offering some encouragement.” The monthly uptick is welcome but modest: at £299,330, average prices remain fractionally below where they started 2026, and annual growth at +0.6% is among the weakest in four years.
Nationwide House Price Index
Nationwide’s June reading was flat month on month on a seasonally adjusted basis, leaving the average at £277,484, while annual growth accelerated to +2.2% — up from +1.7% in May and the strongest reading since August 2025. Northern Ireland led regional growth at +8.6% annually; the Outer South East was weakest at just +0.1%. Nationwide also released separate research showing energy-efficient homes (EPC rated A or B) command a 1.6% price premium over D-rated equivalents — and that 49% of buyers aged 25–34 now cite energy efficiency as “very important” in choosing a property. That is a trend with direct implications for the growing range of green and energy-efficient mortgage products now being launched by lenders.
Market-moving news.
Bank of England holds at 3.75% — but September is now a live decision
The MPC voted 6–3 to hold Bank Rate at 3.75% on 30 July, accompanied by the Bank’s quarterly Monetary Policy Report. The vote split is the most hawkish since 2023: chief economist Huw Pill, external member Megan Greene and Catherine Mann all voted to raise immediately to 4%, arguing that self-reinforcing wage and price dynamics risk keeping inflation elevated longer than the Bank’s central forecast assumes. The majority held, pointing to the surprise drop in CPI to 2.6% in June — below the Bank’s own forecast — and noting that tight borrowing conditions are already doing work to cool demand. The Bank has held at 3.75% at every meeting in 2026, having cut from 4% in December 2025. For mortgage borrowers, Bank Rate itself hasn’t moved. But fixed mortgage rates are priced off swap markets — where Bank Rate is expected to go — not where it is today. With three members already voting for 4%, markets are pricing a hawkish lean into September. Anyone with a deal expiring in the next six months should seriously consider locking in now.
Mortgage rates: cuts then hikes through July — where are we now?
July saw a two-act mortgage rate story. In the first two weeks, lenders competed aggressively — Accord cut 2yr fixes by up to 30bps; Barclays cut by up to 66bps; Santander trimmed by 21bps; Halifax and Virgin Money both reduced selected products. This pushed the average 2yr fix down toward 5.35% by mid-month. Then renewed Iran fighting pushed Brent crude back above $100/barrel and swap rates topped 4% again. Within days, five major lenders — NatWest, Nationwide, Virgin Money, Barclays and Coventry Building Society — all raised rates, some by as much as 35bps. Nationwide’s two-year fix for home movers moved from 4.24% to 4.59% — roughly £40/month extra on a typical mortgage. NatWest’s lowest standard residential rate moved to 4.30% for a 2yr fix at 60% LTV. The average 2yr fix ended the month around 5.48% and the 5yr fix around 5.50%. The message for borrowers: the rate environment remains volatile, and the direction of risk is upward given the MPC’s growing hawkish split.
New mortgage products worth knowing about
Leeds Building Society 98% LTV — launched mid-July, available at a five-year fixed rate of 5.65% with a minimum £5,000 deposit and maximum loan of £500,000. Allows borrowing of up to five times household income for applicants earning at least £30,000, with no completion fee and free standard valuation. One of the most accessible first-time buyer products currently available.
Lloyds/Halifax £5k deposit mortgage — equivalent to 98% LTV, fixed at 5.89% for five years, available on purchases up to £300,000. Available via brokers and directly. The deposit must be the buyer’s own — not gifted. Research by Mortgage Advice Bureau suggests 73% of prospective buyers are unaware 5% deposit mortgages exist — this product is a strong example to share with first-time buyer clients.
Santander Zero Bills mortgage (with Octopus Energy) — the UK’s first mortgage from a high-street bank specifically for Octopus Zero Bills homes. Eligible buyers of qualifying new-builds could borrow up to £30,000 more than for a comparable standard home, by accounting for ten years of guaranteed zero energy bills. A compelling green proposition as energy-efficient property commands a growing price premium.
Hodge Bank removed loan-to-income caps for applicants earning £40,000+ — widening access for professional buyers who previously faced restrictions.
Andy Burnham becomes PM — Angela Rayner returns as Housing Secretary
Andy Burnham was formally appointed Prime Minister on 20 July, replacing Sir Keir Starmer. His cabinet reshuffle saw a sweeping clear-out of Starmer loyalists: Rachel Reeves (Chancellor), David Lammy, Steve Reed (Housing) and Peter Kyle all departed. John Healey was appointed Chancellor; Ed Miliband as Foreign Secretary. Most significantly for the housing market: Angela Rayner was reappointed Secretary of State for Housing, Communities and Local Government, returning to the role she held from the 2024 election until her resignation in September 2025 over a stamp duty dispute. Matthew Pennycook was retained as Housing and Planning Minister and now attends Cabinet. Industry reaction was broadly positive — “welcome continuity,” said several commentators, noting that Rayner and Pennycook had been at the helm when mandatory local housing targets were reintroduced and the grey-belt planning reforms were launched. Burnham himself has a strong track record on social housing from his time as Greater Manchester Mayor, having pledged 10,000 new council homes by 2028. However, actual housing delivery is already well short of the government’s 300,000 annual target — Savills forecasts just 167,500 homes per year will be delivered through 2029/30. The tension between Burnham’s pro-devolution agenda and Rayner’s interventionist instincts on planning committees will be worth watching.
£4.5bn housebuilder class action formally filed at the Competition Appeal Tribunal
The class action led by former Which? legal manager Mark McLaren was formally filed at the Competition Appeal Tribunal in July. The claim names seven major housebuilders — Barratt Redrow, Persimmon, Taylor Wimpey, Berkeley Group, Bellway, Bloor Homes and Vistry Group (including Countryside Partnerships) — alleging that 700,000 new-build buyers between October 2015 and 24 June 2026 paid inflated prices due to anti-competitive information sharing. If the Tribunal certifies it as a collective action and it succeeds, affected buyers could receive between £3,100 and £6,200 each. City analysts remain broadly sceptical of its chances — RBC Capital Markets’ Anthony Codling noted housebuilders are “price takers not price setters” — but the filing adds legal uncertainty on top of a sector already nursing 25–28% year-to-date share price falls. For anyone who bought a new-build from any of these developers in the relevant period, it is worth registering an interest with the claim administrators at Geradin Partners and Hausfeld.
Housebuilders pull back on land purchases — what it means for future supply
A number of major housebuilders are materially reducing their land acquisition activity, raising serious questions about housing supply in 2027 and beyond. Berkeley Group announced earlier this year that it would halt land buying outright, citing the Middle East war, falling consumer confidence and building safety regulation costs. Land agent Henry Boot warned in July that “a number of home builders have changed their land strategy, slowing acquisition activity” — the firm expects its own 2026 plot sales to be “materially below” last year’s 3,957. Savills’ land agent sentiment survey dropped sharply from +26 in Q1 to −18 in Q2. The cost of building a new home has increased by £76,000 over the last five years; build cost inflation is still running at 3.2% per year, only forecast to ease to 2.0% by end-2026. In Q1 2026, just 6,325 private sector homes broke ground in London alone — an annualised figure far below what government targets require. If land purchasing remains suppressed throughout 2026, the pipeline for 2028 and 2029 completions will be severely constrained — which in turn means even longer-term upward pressure on prices once mortgage affordability improves and buyer demand returns.
US CPI posts biggest monthly drop since 2020 — why it matters for UK mortgages
US CPI fell 0.4% in June — the largest single-month decline since April 2020, driven by a 5.7% drop in energy costs as the partial Iran ceasefire eased oil prices. The annual rate fell sharply to 3.5% from 4.2% in May, well below the 3.8% consensus forecast. Core inflation (ex food and energy) was flat month-on-month — 2.6% annually — below expectations. Global bond markets responded immediately: US 2yr Treasury yields fell 7bps, the US dollar weakened, and rate-cut expectations for the second half of 2026 were brought forward. For UK borrowers, the read-through is not direct — the BoE sets rates independently — but global inflation dynamics influence UK swap rates and therefore fixed mortgage pricing. The partial easing in global energy prices is one reason UK fixed rates began falling in early July before the renewed Iran flare-up reversed those gains mid-month. If US inflation continues to ease and the Iran situation stabilises, there is a reasonable case for UK fixed rates to drift lower again before September’s BoE meeting.
Landlords: Renters’ Rights Act impact and the growing buy-to-sell trend
Estate Agent Today reported that 9.2% of homes listed for sale in June had previously been rented out — a figure still elevated against longer-run norms, though Hamptons data suggests the landlord sell-off has slowed from its peak, with purchases now slightly outpacing sales in the investor segment. The sell-off accelerated when the Renters’ Rights Act (which received Royal Assent in October 2025 and came into force in May 2026) abolished Section 21 no-fault evictions and limited rent increases to once per year. Separately, Rentila’s landlord review noted that mortgage payments are now cheaper than rents across much of the UK — Pepper Money analysis found average mortgage payments of around £607/month in areas like Middlesbrough versus average three-bed rents of over £1,269/month nationally, making a compelling case for first-time buyers who can access a low-deposit deal. Annual rental growth has eased to around 2.1% (Rightmove rental tracker), with the market moving from the frenzied bidding of 2023–24 to a more balanced but still structurally undersupplied dynamic.
Top 5 UK housebuilders — share price & news.
All five named defendants in the £4.5bn CAT class action filed July 2026. Trend lines are indicative — confirm live prices via LSE. Year-to-date falls of 25–28% reflect higher rates, build cost pressures, and legal uncertainty.
Persimmon plc LSE: PSN
JP Morgan’s top pick in the sector — named preferred stock in June with a 1,350p price target (RBC), citing lower average selling prices (~£306,900), broad regional spread and vertical integration as key advantages.
Order book has risen 5% to £2.5bn with private ASPs up 5% — one of the more positive operational data points in the sector this year.
⚠ CAT lawsuit: named defendant in £4.5bn class action filed July 2026. Shares fell 2.3% on the 30 June announcement.
Barratt Redrow plc LSE: BTRW
RBC upgraded to “outperform” in March with a 350p target, calling Barratt “top of the class” alongside Persimmon. Berenberg also upgraded during June, citing attractive valuation.
A major shareholder reported to have pushed for a larger share buyback programme during June.
⚠ CAT lawsuit: named FTSE 100 defendant in the £4.5bn class action. Shares fell 1.9% on the 30 June announcement.
Taylor Wimpey plc LSE: TW.
Downgraded to “underweight” by JP Morgan in June, with 2027 estimates 15% below Street consensus. The bank questions whether TW.’s dividend is sustainable given declining earnings.
Order book pricing “c.1% lower year on year,” with the South of England the weakest region. Most-downgraded stock of July across Berenberg, Goldman Sachs and Morningstar.
⚠ CAT lawsuit: named defendant in £4.5bn class action filed July 2026.
Berkeley Group Holdings LSE: BKG
RBC upgraded to “sector perform” in March with 3,900p target, citing the robustness of its long-cycle regeneration model. Focus on complex London/South East schemes provides more earnings visibility.
Berkeley halted land buying outright — the most explicit signal in the sector that conditions are not yet right for new site investment. Only builder to formally acknowledge the class action publicly.
⚠ CAT lawsuit: named defendant. Berkeley confirmed it is “aware of the claim” and declined further comment.
Vistry Group plc LSE: VTY
The most heavily downgraded builder of July. JP Morgan cut to “underweight” with 2027 forecasts 33% below Street; argues Vistry’s partnership model leaves it most exposed to build cost inflation. RBC has a 180p target (“underperform”).
Named alongside Countryside Partnerships in the CAT class action. Operational and legal pressures combine to make this the most complex stock in the sector at present.
⚠ CAT lawsuit: named defendant (inc. Countryside Partnerships). RBC “underperform,” price target 180p.
Sources: Bank of England (MPC Summary, Monetary Policy Report, Money & Credit, Credit Conditions Survey), RICS UK Residential Market Survey, Rightmove House Price Index, Lloyds House Price Index, Nationwide House Price Index, US Bureau of Labor Statistics, Competition Appeal Tribunal, City AM, Estate Agent Today, Landlord Today, Mortgage Introducer, Heron Financial, Sharecast, Specification Online, company announcements and broker research. Swap rates and housebuilder trend lines are indicative — always confirm live rates and prices with your adviser before making any decisions. 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.