A fall in mortgage rates from 4.5% now to around 3.6% in late 2025 may mean that, despite increases in taxes in the Budget on 30th October, house prices rise by 5.0% in 2025 rather than the consensus forecast of 2.5-3.0%. By allowing the temporary rise in the stamp duty exemption thresholds to expire at the end of March 2025, the Budget may boost housing demand and prices in the coming months as buyers rush to complete before April. The bigger risk, though, is taxes that are increased in the Budget by more than the £25bn we have pencilled in. That could reduce consumer confidence and restrain disposable incomes by more than we expect, and therefore mean housing demand and house prices rise more slowly.
We will be discussing what the policies announced in the Budget mean for the economy and the financial markets at 3pm GMT on Wednesday 30th October (register here).
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