The average UK house price came close to reaching a record high last month as falling mortgage rates helped to boost confidence among buyers, according to Halifax.

The UK’s largest mortgage lender said the average price hit £293,399 in September, just short of the record £293,507 reached in June 2022.

Prices have now risen for three months in a row, Halifax said, as market conditions improve.

“Mortgage affordability has been easing thanks to strong wage growth and falling interest rates,” said Amanda Bryden, head of mortgages at Halifax.

“This has boosted confidence among potential buyers, with the number of mortgages agreed up over 40% in the last year and now at their highest level since July 2022.”

Compared with a year ago, Halifax said house prices were up 4.7% – the fastest pace of growth since November 2022.

That was partially a reflection of the weakness of activity a year ago. The value of a typical property value has risen by about £13,000 over the past year, but was a rebound from falling value over the previous 12 months.

Looking back two years, prices had only increased by just 0.4%, the equivalent of £1,202, the Halifax said.

Guy Gittins, chief executive of Foxtons estate agents, told the BBC’s Today programme: “The market is recovering.

“It certainly won’t be the best year we’ve ever seen but each time we see a small interest rate drop, more buyers are returning from that backlog of last year.”

Karen Noye, mortgage expert at Quilter, said: “Currently, some lenders offer deals around the 4% mark, a stark contrast to the 5% or higher rates seen in the immediate aftermath of the 2022 mini-budget and beyond.

“This reduction in rates has enabled buyers to secure larger mortgages, making previously unaffordable properties more attainable and boosting buyer confidence.”

However, Ms Noye added that the cost of borrowing was still out of reach for many, especially first-time buyers.

On Monday, the average rate on a two-year fixed rate mortgage was 5.38%, according to the financial information service Moneyfacts. It said the average for a five-year fixed deal was 5.05%.

Halifax said that despite recent cuts in mortgage rates, “housing costs remain a challenge for many”.

According to the lender, the typical first-time buyer is now buying a property priced at £232,769, which is the highest price since May this year.

However, this is still around £1,000 less than the average amount a first-time buyer was paying two years ago.

Halifax’s house price data is based on its own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.

• Make overpayments. If you still have some time on a low fixed-rate deal, you might be able to pay more now to save later.
• Move to an interest-only mortgage. It can keep your monthly payments affordable although you won’t be paying off the debt accrued when purchasing your house.
• Extend the life of your mortgage. The typical mortgage term is 25 years, but 30 and even 40-year terms are now available.

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