LONDON, Aug 1 Reuters British house prices were 2.1 higher than a year earlier in July, the biggest annual increase since December 2022, although they are still below peaks reached earlier that year, figures from Nationwide Building Society showed on Thursday.

Prices rose 0.3 in July alone to an average of 266,334 pounds 341,706, and both the monthly and annual increases were slightly greater than economists had forecast in a Reuters poll.

The figures come shortly before the Bank of England is due to announce its August interest rate decision, which many economists think will see interest rates cut from the 16year high where they have been for almost a year.

Investors expect Bank Rate to be lowered modestly … which, if correct, will help to bring down borrowing costs, Nationwide Chief Economist Robert Gardner said.

However, the impact is likely to be fairly modest as the swap rates which underpin fixedrate mortgage pricing already embody expectations that interest rates will decline in the years ahead, he added.

British house prices in July were 2.8 below the peak reached in the summer of 2022, Nationwide said.

House prices surged by 25 between the start of the COVID19 pandemic which spurred demand for more spacious homes in many Western countries and September 2022, when a bond market slump under thenPrime Minister Liz Truss led to a temporary dearth in mortgage finance.

Prices have largely plateaued since, as BoE rates rose and then stayed high to tackle a…