UK asking prices rose by 1% in October to an average £371,015, but higher mortgage rates are putting increasing pressure on affordability, with sellers in several previously resilient regions cutting their price expectations, according to the latest Rightmove house price index (HPI).

The average asking price of a newly listed home increased by £3,575 during the month, but fell slightly year-on-year, down 0.1%.

The average two-year fixed mortgage rate has climbed to 5.55%, from 5.29% in September and 4.25% before the war in Iran began in February, adding around £250 to the monthly cost of a typical new mortgage.

The impact is becoming more apparent in lower-priced areas. Asking prices fell by 2.0% in the North East, 1.9% in Scotland, 0.6% in the North West and 0.3% in Wales. Yorkshire and the Humber was the exception, recording a 0.3% increase.

London asking prices rose by 2.5% in October, recovering some of the 6.0% decline recorded during July and August.

However, prices remained 1.7% lower than a year earlier, while 38% of properties were listed with reduced asking prices and homes took an average of 78 days to find a buyer. Only 42% of properties successfully found a buyer, suggesting the monthly increase does not necessarily mean a wider recovery.

Agreed sales were 8% lower than a year earlier, broadly in line with the trend so far this year, while the number of new prospective buyers contacting estate agents fell by 9%, the HPI also revealed. New listings increased by 3%, and the number of homes available for sale remained at its highest level for this time of year since 2014.

Colleen Babcock, Rightmove property expert, said: “The rapid rise in mortgage rates is really beginning to hit buyers’ budgets. We’re now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain, where prices had been more resilient this year. It’s an early sign that higher mortgage costs are putting pressure on affordability even in markets with lower property prices, affecting the areas and types of property that buyers can afford.

"This is a stark reminder of how price-sensitive the market is, and the message from agents, backed up by our data, remains the same – that competitive pricing from day one of marketing is critical to capitalise on initial buyer interest."

The forthcoming Budget is also adding uncertainty, with some first-time buyers (FTBs) potentially waiting for further details of the Your First Home scheme for new-build properties, while other households assess the implications of potential tax and spending announcements.

Jinesh Vohra, CEO and founder of mortgage overpayment app Sprive, commented: "These figures show buyers are being driven by monthly affordability, not asking prices. With mortgage rates at a three year high, the smartest thing homeowners can do is use this period to reduce their debt. Every overpayment made now is worth more than it has been in years."

Jennifer Lawler, director of operations at Elite Realty Invest, added: "Deals are still being done, and while down 8% on last year, it still shows resilience given the rate environment. Demand hasn't disappeared, it's become more discerning.

"For investors, more discerning demand means the bar for what makes a good deal has risen. Rental yield, location, and purchase price have always mattered, but in a market where buyers are stretched and mortgage costs are elevated, they’re now the difference between an investment that works and one that doesn’t.

"The Budget next week is the most significant near-term variable for the market. Whatever it brings, the clarity alone will be welcome - once the Budget is out of the way, investors and buyers will have a clearer picture to act on.”

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