Our forecast that interest rates, and therefore mortgage rates, won’t rise by as much as investors expect next year suggests house prices will rise by an above-consensus 2.5% in the year to Q4 2027. But the prospect of quoted mortgage rates averaging 4.5% in 2027 means the housing recovery will be soft rather than strong. A continuation of the recent recovery in demand and still tight supply suggests rents will rise by around 3.5% in both 2027 and 2028.