Increase in mortgage rates to be limited

Anticipation of higher interest rates has pushed up fixed mortgage rates. And with scope for banks to absorb higher costs in their margins now exhausted, future changes in interest rate expectations will be fully passed through to mortgage rates. But as we think the forthcoming rise in interest rates is already priced in, we are not expecting mortgage rates to jump much higher.
Andrew Wishart Property Economist
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UK Housing Market Data Response

IHS Markit/CIPS Construction PMI (Dec.)

The construction PMI declined last month to end the year on a negative note, more than erasing the gain made in November. Despite tentative signs that they are starting to ease, we expect labour and supply shortages will continue to dampen output in the near term.

7 January 2022

UK Housing Market Data Response

Halifax House Prices (Dec.)

Another substantial rise in the Halifax house price index in December ensured that the lender agreed with Nationwide that the rise in house prices over the 2021 calendar year was the strongest for at least 15 years. And there is no sign of prices losing momentum yet.

7 January 2022

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UK Housing Market Data Response

RICS Residential Market Survey (Oct.)

Rather than representing a “rush before mortgage rates rise”, we suspect that the rise in new buyer interest in October will prove durable. With inventory very limited, that points to house prices rising by more than most other forecasters expect in 2022.

11 November 2021

UK Housing Market Outlook

Higher interest rates to dab on the brakes

We think it will take longer than most others expect for rising interest rates to bring down the curtain on the COVID-19 house price boom. A large stock of household savings, the ongoing adjustment to home working and very limited stock on the market will conspire to drive house prices up by a further 5% in 2022, much more than the consensus expectation of a 2% gain. But rising interest rates will cool house price growth and transactions come the second half of 2022 and in 2023. However, with the labour market in good shape, Bank Rate would have to rise to over 2% for the housing market to get into correction territory, which neither we nor investors anticipate.

8 November 2021

UK Housing Market Update

Dovish surprise reduces housing market risks

The indication from the Bank of England that Bank Rate of 1.25% would be too high for the economy suggests that the forthcoming rise in interest rates won’t be anywhere near large enough to topple the housing market. Rather, we expect house prices to rise by a further 5% in 2022.

5 November 2021
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