The UK's housing market is likely to soften as households face rising mortgage and energy costs due to the impact of the Iran war, Nationwide has said.
The bank's comments came as it reported a jump in house prices for March, up by 0.9%, saying the market "had regained momentum" during the month.
However, Nationwide said the surge in energy prices sparked by the Middle East conflict was a "significant shock to the global economy, clouding the outlook".
Expectations interest rates will rise have caused lenders to push up mortgage rates and pull hundreds of mortgage products over the past few weeks.
Nationwide's figures showed March's increase took the average cost of a property to £277,186. Annual price growth jumped to 2.2%, up from 1% in February.
But the building society warned the market will take a hit in the event of a prolonged conflict in the Middle East.
Mortgage rates have been rising sharply due to a dramatic change in expectations over the future direction of interest rates.
Before the war began, the Bank of England had been expected to cut rates twice this year. However, the surge in energy prices means financial markets are now expecting the Bank to raise rates to counter any rise in inflation.
This change in expectations has led lenders to raise their mortgage rates.
The average two-year fixed rate has jumped from 4.83% at the start of March to 5.84%, according to the financial information service Moneyfacts. The average five-year fixed rate has risen from 4.95% to 5.76% over the same period and is now at its highest level since September 2023.
Moneyfacts said that for a typical £250,000 loan over 25 years, almost £1,800 a year had been added to the average two-year fixed deal since the start of March, while more than £1,400 has been added to the average five-year deal.
Robert Gardner, Nationwide's chief economist, said if higher rates are sustained, "this could reverse some of the improvement in housing affordability that has taken place in recent years".
"With consumer sentiment also likely to be dented by the uncertain outlook and the prospect of rising energy costs, housing market activity is likely to soften," he said.
Caitlyn Eastell, personal finance analyst at Moneyfacts, said: "Many households may have to tighten their budgets in response to these rising costs, and first-time buyers with smaller deposits may be held back from getting on the property ladder."
Nationwide's Gardner added that although some bills could be rising in the months ahead, "household finances are solid, with household debt at its lowest level relative to income for two decades, and significant savings buffers accumulated in recent years."
"Hopefully this will help mitigate the additional pressures, though many are still recovering from the previous cost of living crisis," Gardner said.
He also noted that about 90% of existing mortgage holders are on fixed-rate deals, and so will not feel an immediate impact from higher interest rates.
Ashley Webb, UK economist at Capital Economics, said he doubted house prices would meet the previous forecast of 3.5% growth this year.
"Depending on how far mortgage rates rise and by how much the economy weakens, prices may rise by a more modest 1.0% or so, or even stagnate in an adverse scenario," he said.
"But we're not expecting big outright falls in nominal prices."
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