Mortgage rates near 6% as house price growth slows

Average fixed mortgage rates have moved close to 6%, house price growth is slowing, and the Budget is two weeks away. Here is what the latest figures say, and what they could mean for Surrey and south-west London movers.

Figures correct as of 13 October 2026.

It has been a week of cautious data. Prices are broadly flat, buyers are watching their budgets closely, and borrowing costs have risen again. Nobody can say where things go from here, so this post sticks to what has been reported and who reported it.

The numbers this week

Nationwide’s September index, published on 12 October, showed prices 0.2% lower than in August (seasonally adjusted) and 0.8% higher than a year earlier. Annual growth was 1.6% in August, so it has roughly halved. The average price in Nationwide’s data was £274,251. Nationwide’s commentary pointed to weak activity, energy prices linked to Middle East tensions, and expectations of higher interest rates. It also noted that house prices have grown well below earnings, which helps affordability even though mortgage costs are higher.

The Lloyds Bank index (formerly Halifax) tells a similar story, with September prices unchanged on both the month and the year at an average of £298,441, according to Estate Agent Today’s report of 8 October. The two indices use different methods and data, which is why their figures differ.

The RICS survey for September, published on 8 October, showed a market that lost some momentum. Surveyors reported a net balance of -22% for new buyer enquiries (-18% in August) and -18% for agreed sales (-16% in August). There was one more encouraging sign: new sales instructions turned slightly positive at +6%, the first positive reading since mid-2025. On prices, RICS recorded a net balance of -32%, though respondents’ expectations for the next 12 months averaged out at 0%, which points to broadly flat prices rather than sharp falls. In lettings, tenant demand was +23% in September, the third monthly rise in a row.

Mortgages and interest rates

Moneyfacts reported on 5 October that the average five-year fixed mortgage rate had reached 6%, a level not seen for roughly three years, and that the average two-year fix was 5.98%, the highest since mid-December 2023. The number of fixed deals priced below 5% fell from about 1,500 in early September to nine. Moneyfacts linked the rises to higher swap rates, with Middle East conflict, fuel inflation worries and a global bond sell-off all mentioned.

Which? reported on 13 October a slightly lower average of 5.95% for five-year fixes and 5.93% for two-year fixes. The difference probably reflects the date and data used, so it is worth treating these as a range rather than an exact figure. Which? also reported that lenders expect Bank Rate to rise over the next 12 months. Bank Rate was held at 3.75% at the September meeting, according to Moneyfacts, which also noted that many commentators expect a possible rise in November. That is a forecast by others, not a certainty.

Politics and policy

The Budget is due on Wednesday 28 October 2026, according to Professional Pensions’ report of the Chancellor’s announcement. Property taxes are the subject of a great deal of speculation, but little is confirmed. Reports from tax and landlord advisers say possible ideas include aligning capital gains tax with income tax rates and lowering the threshold for the planned council tax surcharge on homes worth £2m or more. None of this has been announced, and the same sources say replacing Stamp Duty or council tax is not expected in this Budget.

Some measures are already announced. The surcharge on homes worth £2m or more in England (£2,500 to £7,500 a year) is due from April 2028, and a landlord database registration fee of £65 per property per year is due to start from 15 December 2026, region by region. As with most property taxes, views differ. Supporters of a high-value surcharge argue it raises money from those best able to pay. Critics argue it can hit owners with a lot of equity but modest income, and can discourage moves at the top end of the market. We will report what is actually announced on the day.

What this means for Surrey and south-west London

Nationwide does not publish a Surrey figure, but its regional data gives some context. London was up 0.4% over the year to the third quarter (average £529,720), the only southern region to show an annual rise. The Outer South East was flat at 0.0% and Outer Metropolitan, which covers the commuter belt around London, was 0.2% lower. Estate Agent Today’s report of the Lloyds figures also quotes a property finder describing prices as falling in London and southern England. Local Land Registry figures for Surrey, Wandsworth and Merton are due in the next official release, and we will cover them when they are out.

In general terms, buyers have time and choice, but higher borrowing costs mean they are being careful with their budgets. Sellers benefit from the first signs of fresh instructions, but surveyors still report weak price sentiment, so realistic pricing remains important. Landlords may note that tenant demand has risen for three months running. Anyone with a fixed deal ending soon may want to speak to a qualified adviser about their options.

Sources

• Nationwide, House Price Index for September 2026 (12 October 2026)
• RICS, UK Residential Market Survey for September 2026 (8 October 2026)
• Moneyfacts, average five-year fixed rate at 6% (5 October 2026)
• Which?, average five-year mortgage rate rises above 6% (13 October 2026)
• Estate Agent Today, reporting the Lloyds Bank index for September (8 October 2026)
• Professional Pensions, Budget date confirmed (3 August 2026)
• Padlord, Autumn Budget 2026 and landlords (30 September 2026)

This article is general information, not financial or mortgage advice. Property values can go down as well as up. Please speak to a qualified mortgage adviser before making borrowing decisions.