House prices 'ignore credit woes'
September with prices still rising in the month, according to the Nationwide.
But the building society said riskier mortgages had now become more expensive for borrowers.
Prices rose 0.7% in September, taking the average price of a home to £184,723 from £183,898 in August.
However, Nationwide said annual price growth slowed to 9% in September from 9.6% - its lowest in almost a year.
The building society added that most of the slowdown in annual price inflation was down to the effect of recent Bank of England interest rate hikes.
But the group added that recent problems in the financial markets would "undoubtedly... take the froth out of the market".
Lending fears
Banks have become increasingly wary of lending to each other in recent weeks as fears about their exposure to risky loans have mounted in the wake of a sub-prime lending crisis in the US.
Northern Rock became the highest profile victim of the problems when the squeeze in the credit markets forced it to seek emergency funding from the Bank of England.
Nationwide economist Fionnuala Earley warned that banks are likely to pass on the increased charges they are facing in the credit markets to customers in the form of higher fees and interest on loans.
"The message from lenders is clearly that from now on, risk must have its price," Ms Earley said.
"As a result, highly leveraged borrowing will remain less attractive and lending volumes in this segment may decline."
Slowing prices
On Wednesday, house building firm Barratt said sales of its homes fell as much as 10% in the week after Northern Rock got into difficulties.
But looking ahead, there was some good news for property owners, Nationwide said.
"The interest rate outlook has shifted from hawkish to dovish which could provide some welcome relief to homeowners next year," it said.
This latest survey from the Nationwide, which looks at its own lending to house buyers, lends further weight to the view that a slowdown in prices is now underway.
Although some surveys, such as that of the rival lender the Halifax, say prices are still accelerating, other market commentators such as the Royal Institution of Chartered Surveyors are now claiming that the summer has seen the start of the long-predicted slowdown in prices.
Source: bbc.co.uk
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