UK Housing Outlook: Housing to shrug off the weak economy

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.)