A decline in mortgage interest rates from the start of 2012 was an important factor behind the rise in house prices in recent years. But we don’t think the upcoming drop in interest rates will have the same impact. Rates are being cut because economic growth is slowing, and that will offset the impact of lower mortgage rates on housing demand. Alongside more cautious mortgage lenders, that means house price growth is set to slow to zero by end-2020.
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