LONDON (Bloomberg) — UK house prices rose at the slowest pace in four months in May as interest rates at a six-year high discouraged buyers, Hometrack Ltd. said.The average cost of a home in England and Wales increased 0.6 percent from April, the least since January, to $175,600 ($348,000), a survey by the London-based research company showed yesterday. Price growth was "subdued" in all regions apart from the areas around the capital as London prices rose 1.3 percent from the previous month, Hometrack said. "The steady ratcheting-up of interest rates was bound to take its toll," said Richard Donnell, director of research at Hometrack, in a statement. "The expected slowdown will be exacerbated by any further increases in interest rates above the current 5.5 percent."

The report, along with data showing slowing demand for mortgages, suggests a property-market boom that pushed up home prices 10 percent last year is cooling as Britons become reluctant to add to record debts of $1.3 trillion. UK property prices are about 15 percent "above fair value," according to a May 25 report by Lehman Brothers Holdings Inc.