Large downward shifts in interest rate expectations mean that mortgage rates will continue to fall for the next month or two. That will support some recovery in activity and means that price declines are behind us for now at least.
As we expect the Bank of England to wait longer than other major central banks to reduce interest rates, we expect mortgage rates to stabilise in early 2024. As we also forecast unemployment will rise, we think that, following a 2.5% drop in 2023, house prices will fall by 1.5% in 2024. However, if recent declines in market rates continue, further house price falls could well be avoided altogether.
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