Our forecast that the Bank of England won’t start cutting interest rates until the second half of 2024 means mortgage rates are likely to stay between 5.5% and 6.0% until mid-2024. While transactions volumes have only seen a modest decline so far, we expect a further slump in lending as the full impact of the surge in mortgage rates is felt. High mortgage rates will mean demand remains weak at the same time as the number of homes on the market is rising to more normal levels. As a result, we expect a further 5% fall in house prices, taking the peak-to-trough fall to 10.5%.
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