The sharp rise in transactions in October and the acceleration in house price growth in November suggest some relief rally or pent-up demand after the Budget is more than offsetting the recent rises in mortgage rates. In any case, if we’re right that Bank Rate will be cut from 4.75% now to 3.50% in early 2026, which would be further than the low of 4.00% that investors currently expect, the average mortgage rate may fall to around 4.0% in 2026. The resulting improvement in mortgage affordability will probably drive above-consensus house price growth of 3.5% y/y in Q4 2025 and 4.5% y/y in Q4 2026.
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