# UK House Prices Fall as Mortgage Rates Rise and JLR Sets Up £500,000 Redundancy Fund > By · Published 2026-09-08 · Updated 2026-09-08 > https://economysignal.com/en/2026/09/08/uk-house-prices-fall-as-mortgage-rates-rise-and-jlr-sets-up-500000-redundancy-fund/ ## Summary UK house prices fell for the first time in nearly three years, Lloyds reported, as mortgage rates rose to 5.63% (two-year fixed) and 5.68% (five-year fixed) amid swap rate volatility and Middle East tensions. Separately, Jaguar Land Rover created a £500,000 fund to support workers facing redundancy as it cuts almost 10% of its workforce. ## Key points - Average two-year fixed mortgage rate rose to 5.63%, five-year fixed to 5.68% - UK 10-year gilt yield climbed above 5%, an 18-year high, amid global bond sell-off - JLR set up a £500,000 fund to support staff facing redundancy as it cuts nearly one in ten jobs UK house prices fell for the first time in nearly three years in the past month, according to Lloyds, as average [mortgage rates](https://economysignal.com/en/tag/mortgage-rates/) edged higher, with two-year fixed deals at 5.63% and five-year fixed deals at 5.68%. Separately, Jaguar Land Rover has set up a £500,000 support fund for staff at risk of redundancy as the carmaker prepares to cut almost one in ten jobs. ## Why are UK house prices falling now? Analysts point to a combination of rising borrowing costs and uncertainty over the government’s upcoming Budget as the main drivers behind the drop in house prices. Tom Bill, head of UK residential research at Knight Frank, described the spring period as a slump rather than the usual seasonal pickup, with both prices and transaction volumes weakening under pressure from higher mortgage costs and speculation about possible tax changes. Whether the market recovers later in the year will depend heavily on how much pre-Budget speculation persists and how geopolitical tensions in the Middle East affect UK inflation expectations, according to Bill. > We have seen a spring slump rather than a seasonal bounce this year as prices and transactions came under pressure from higher mortgage costs and an ever-present concern around which taxes the government may raise next. ## What is driving the rise in mortgage rates? Major lenders including HSBC and NatWest have increased mortgage rates since the start of September, reflecting renewed volatility in swap rate markets that underpin fixed-rate pricing. Swap rates have climbed sharply compared with a month ago, prompting lenders to widen margins rather than risk pricing deals too low if interest rates rise even briefly. The escalating military conflict between the US and Iran has reignited inflation fears, while the UK 10-year gilt yield has pushed above 5% to an 18-year high amid a broader global bond sell-off, adding further strain to the wholesale funding costs that shape fixed mortgage rates. Despite these pressures, the current disruption is described as far milder than the turmoil seen roughly six months ago when the Middle East conflict first began, a period during which many lenders withdrew fixed-rate deals entirely. Crucially, commentators note that today’s swap rate pressures stem from global events rather than UK fiscal policy, meaning the scale of rate hikes and product withdrawals remains well below the disruption triggered by the 2022 mini-Budget. ## What support is JLR offering workers facing redundancy? Jaguar Land Rover has established a £500,000 fund to assist employees affected by planned [job cuts](https://economysignal.com/en/tag/job-cuts/), as the company moves to reduce its workforce by close to 10%. The package is intended to help staff facing the threat of redundancy navigate the transition, though further details on eligibility and distribution were not specified in the announcement. ## Source - [theguardian](https://www.theguardian.com/business/live/2026/sep/07/uk-house-prices-fall-subdued-market-jlr-job-cuts-shares-oil-latest-news-updates) — theguardian [](https://x.com/intent/tweet?url=https%3A%2F%2Feconomysignal.com%2Fen%2F2026%2F09%2F08%2Fuk-house-prices-fall-as-mortgage-rates-rise-and-jlr-sets-up-500000-redundancy-fund%2F&text=UK%20House%20Prices%20Fall%20as%20Mortgage%20Rates%20Rise%20and%20JLR%20Sets%20Up%20%C2%A3500%2C000%20Redundancy%20Fund)[](https://pinterest.com/pin/create/button/?url=https%3A%2F%2Feconomysignal.com%2Fen%2F2026%2F09%2F08%2Fuk-house-prices-fall-as-mortgage-rates-rise-and-jlr-sets-up-500000-redundancy-fund%2F&description=UK%20House%20Prices%20Fall%20as%20Mortgage%20Rates%20Rise%20and%20JLR%20Sets%20Up%20%C2%A3500%2C000%20Redundancy%20Fund)[](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Feconomysignal.com%2Fen%2F2026%2F09%2F08%2Fuk-house-prices-fall-as-mortgage-rates-rise-and-jlr-sets-up-500000-redundancy-fund%2F)[](https://api.whatsapp.com/send?text=UK%20House%20Prices%20Fall%20as%20Mortgage%20Rates%20Rise%20and%20JLR%20Sets%20Up%20%C2%A3500%2C000%20Redundancy%20Fund%20https%3A%2F%2Feconomysignal.com%2Fen%2F2026%2F09%2F08%2Fuk-house-prices-fall-as-mortgage-rates-rise-and-jlr-sets-up-500000-redundancy-fund%2F)[](void(0)) ## Sources - [theguardian](https://www.theguardian.com/business/live/2026/sep/07/uk-house-prices-fall-subdued-market-jlr-job-cuts-shares-oil-latest-news-updates)