House prices in Britain grew at an annual rate of just 0.5% in October, the slowest pace in more than two years, The Guardian and Reuters report, citing the lender Nationwide. Growth was 0.8% in September.

The average home cost £273,566 in October, unchanged from the month before, according to Nationwide. Reuters says economists had expected annual growth of 0.6% and a small monthly fall.

Higher mortgage rates are putting off buyers, the outlets report. The average five-year fixed mortgage rate stood at 5.99% on Thursday, according to the data firm Moneyfacts, The Guardian reports.

The Bank of England has held its key rate at 3.75%. Most economists now expect it to raise the rate to 4% next week, its first increase in three years, Reuters reports. Bank of England data showed mortgage approvals for home purchases in September fell to their lowest since December 2023.

Nationwide's chief economist, Robert Gardner, said the conflict in the Middle East has pushed up energy prices and fed worries about inflation. That has raised expectations of higher interest rates, he said. Gardner added that other data points to more softness in prices soon.

Tom Bill of the property firm Knight Frank said the effect of rising mortgage costs "eclipses any support measure announced in this week's budget," The Guardian reports. The government has confirmed a £4.7bn scheme to help first-time buyers.

What we know: Annual house price growth slowed to 0.5% in October, with prices flat on the month.
What we don't: How much a Bank of England rate rise next week would weigh on prices.