Nationwide also thinks that the interest rate cycle could be close to a peak, but energy price rises could equate to a further quarter percentage point on mortgage rates for households with £100,000 mortgage.
The forecast for house price inflation in year to December 2004 remains at 15%.
Alex Bannister, Nationwide's group economist, says: “Price growth declined sharpley in August with the price of the average house rising just 0.1% during the month. Consequently, the annual rate of house price inflation eased to 18.9% in August, from 20.3% in July. The price of the average house now stands at £153,743. Although August's price rise was the lowest monthly increase for almost three years, a better indication of the underlying trend is the average rate of price growth over the last three months.”