Britain's housing market slowed in July in both monthly and annual price rise terms as higher borrowing costs and uncertainty caused by the Iran war overshadowed the market, mortgage lender Lloyds said on Friday. "Affordability remains a challenge for many would-be buyers and, following recent events in the Middle East, mortgage rates have edged higher again after easing earlier in the summer," said Amanda Bryden, head of mortgages at Lloyds. House prices were flat in July, below the 0.2% rise in June, and lower than the 0.1% rise forecast in a Reuters poll. Compared to a year ago, prices were just 0.1% higher, the slowest rate of annual increase since November 2023, and well below the 0.7% rise in June and the 0.4% rise forecast in the poll. Lloyds said affordability remained a challenge. Mortgage costs have jumped since the start of the conflict in the Middle East, tempering demand and denting a strong start in 2026 for the housing market. Previously released data from the Bank of England showed mortgage lenders approved more mortgages than expected in June despite the higher borrowing costs. Investors on Thursday were fully pricing in a quarter-point increase in the main Bank Rate in December.
