Rightmove’s UK House Price Index showed month-on-month growth fell to 0% in February. This was down from 2.8% in the previous period.
The data indicates that asking prices were flat compared with the prior month. It marks a pause after the earlier rise.
Housing Market Momentum Stalls
We are seeing a significant loss of momentum in the housing market, with monthly price growth stalling completely at 0%. This sharp drop from the 2.8% growth seen in January suggests buyer demand is evaporating much faster than anticipated. This is a key signal for the broader UK economy.
This data directly impacts interest rate expectations and weakens the case for any further Bank of England rate hikes this year. We should anticipate derivative markets to begin pricing in a higher probability of a rate cut before the end of 2026. The latest SONIA futures data already shows a slight dovish shift, with yields for late-year contracts ticking lower.
For equity traders, this points to weakness in UK domestic stocks, particularly homebuilders and banks. We saw a similar pattern in early 2025 when a dip in mortgage approvals to below 60,000 per month preceded a 10% fall in the FTSE 250 index. This suggests considering put options on housebuilder ETFs as a potential hedge or speculative play.
The outlook for the British pound has also worsened on this news. A slowing housing market and the prospect of lower interest rates relative to the US and Europe will likely weigh on the currency. We should watch for GBP/USD to potentially test the 1.24 level it struggled to hold last quarter.
BoE Tradeoffs And Market Volatility
This slowdown complicates the central bank’s position, especially as the last inflation reading in January came in at a still-high 2.6%. The Bank is now caught between tackling sticky inflation and supporting a rapidly cooling economy. This policy conflict is likely to increase volatility in both Gilt and currency markets in the coming weeks.
