Our forecast that mortgage rates will fall further than widely expected suggests that a decent recovery in transactions will allow house prices to rise by around 3.5% this year and by 4.5% next year, which would be a bit more than the consensus forecast. But with mortgage rates set to stay relatively high by the standards of the past 15 years, the story is one of the housing market recovering to more normal levels rather than being unusually strong. And while we think the prospect of lower mortgage rates mean the market can shrug off the recent weakness of the economy, the rise in transactions and prices would be more sluggish if the economic weakness persisted throughout this year.
We’ll be discussing the outlook for UK interest rates, and the implications for mortgage rates, in a 20 minute online Drop-In at 3pm GMT on Thursday 6th February. (Register here.)
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services