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Higher rates will leave homes overvalued

Our new, higher interest rate forecast suggests that mortgage rates will climb to an eight-year high in 2023, making house prices look expensive by historical standards. But the overvaluation won’t be as extreme as it was on the eve of the financial crisis, or indeed before any previous substantial fall in house prices. As a result, our base case remains that house prices will stagnate rather than collapse in 2023.

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