Annual house price growth in August of -5.3% is the weakest rate since July 2009.

It represents an annual drop of around £14,600 on a typical home.

BTL purchases involving a mortgage were nearly 30% below pre-pandemic levels, while cash purchases were up 2%.

Nationwide attributes the weakness of mortgage activity to the mounting affordability pressures following the sharp rise in rates since last autumn.

The HPI also highlights a shift in the type of properties being purchased, with detached houses being neglected by buyers as they look for smaller and less expensive homes — shown by flats seeing a smaller decline. 

Emma Jones, managing director at mortgage broker When The Bank Says No, commented: "Higher mortgage rates are hitting the property market for six.

“Borrowers now need to be savvy; if the past few months have taught us anything, it's that rate offerings are not around for long so, if you like the look of a deal today, ensure you secure the rate now rather than miss out.

“It is positive to see more rate reductions on a daily basis, but we need to see lower two-year deals as most borrowers don't want to commit to five-year fixes at the moment.”

Riz Malik, director at R3 Mortgages, said: "The housing market has gone into hibernation.

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“Prices will continue to fall unless there's a substantial drop in interest rates or property values decrease sufficiently to offset the rise in interest rates.

“However, due to the repossession guidelines within the Mortgage Charter, a drastic drop in UK house prices isn't likely in the near future."

Mark Harris, CEO at mortgage broker SPF Private Clients, added: “Until we see a consistent and more considerable decline in mortgage pricing, buyers relying on mortgages are inevitably going to be more price sensitive in coming months on the back of affordability concerns.

“With another 25bps interest rate rise expected from the Bank of England later this month, we are not out of the woods just yet when it comes to rising mortgage costs.

“However, a number of lenders have been reducing their fixed-rate mortgages on the back of better-than-expected inflation news.

“This has led to a calming of swap rates — which underpin the pricing of fixed-rate mortgages — after a period of considerable volatility, and bodes well for further reductions in coming weeks.”

Anna Clare Harper, CEO at GreenResi, noted: “New purchasers relying on mortgages are no longer able to pay 2022 prices, which were artificially buoyed up by the stamp duty holiday and ultra-low interest rates.

“Cash purchasers are not directly affected by rate rises, and this is significant for the market since outright home ownership with no mortgage is the largest — and luckiest — group of property owners.

“For this reason, fears of a price crash are unrealistic.”