According to Lloyds, UK house prices will decline through 2024 and until 2025

The biggest mortgage lender in the UK anticipates a decline in home prices this year and next, followed by an increase in 2025.

According to Lloyds, prices will fall by 2.4% in 2024 and 4.7% this year before rising again.

Lenders have attributed a downturn in home sales to increased borrowing costs.

However, average home prices are still around £40,000 higher than they were during the peak of the COVID-19 pandemic when demand for more space drove up prices.

Lloyds announced on Wednesday that although costs will decline in the next two years, they will climb steadily over the long run, increasing by 0.6% by 2027.

A series of rate increases intended to combat skyrocketing consumer costs have led to interest rates reaching their highest point in 15 years, which is currently at 5.25%.

Lenders have increased their borrowing rates as a result, including for mortgages. Financial information service Moneyfacts reports that the average rate on a two-year fixed is 6.24% based on the most recent data.

The Halifax House Price Index, which excludes data for cash buyers, who today account for almost 30% of house purchases, provides the foundation for Lloyds' predictions.

The average cost of a property in the UK is still high, even though data from mortgage lenders show a decline in housing prices.

The average home price in the UK in August of this year, based on completed transactions, was £291,044, according to the UK House Price Index. This represents a minimal change from a year ago.

Along with its trading statement revealing it has made huge profits as it continues to benefit from rising interest rates, Lloyds, which also owns Halifax and Bank of Scotland, released its projection for house prices.

Pre-tax earnings for the three months ended in September increased to £1.9 billion for the banking business from £576 million at the same time the previous year.

Since consumers now pay more to borrow money for credit cards, mortgages, and other loans, most banks such as Lloyds, have reported higher profits as a result of rising interest rates.

(Sources: bbc.co.uk)