As expectations of a cut move further into the distance, the result for the UK housing market is that more lenders have nudged mortgage rates back above 4% in recent weeks.
The five rate cuts predicted this year by financial markets in early January have become three as strong wage growth fuels underlying inflation, which is pushing mortgage rates in the wrong direction.
However, underlining the resilience of demand, the number of offers made across the UK in January was 7% higher than last year, Knight Frank data shows.
- What's in store for the bridging and commercial markets in 2024?
- Leumi welcomes new senior relationship director
- Momenta Finance secures £100m funding line from HSBC
Knight Frank expects transactions and prices to rise as rates calm back down later this year.
The outlook is not entirely clear though.
The Bank of England risks deepening the UK’s shallow recession if it doesn’t cut quickly enough, its former chief economist Andy Haldane recently warned.
This dilemma follows accusations the Bank was too sluggish in raising rates after the pandemic, leading to 14 consecutive hikes.
“We had strong expectations towards the end of 2023, however the market has been slower out of the blocks than anticipated,” said Rory Penn, head of London sales at Knight Frank.
“The signs are pretty clear though that this year will be stronger than 2023 with offer levels up and buyer sentiment improving.”
Leave a comment