House prices could fall 10% as mortgage debt rises

Economists at Credit Suisse say house prices are set to slump due to rising interest rates and a looming recession. Warning that the rising cost of mortgages will see the burden of payments hit the highest since 2009, Credit Suisse’s Peter Foley said: “We expect house prices to fall at least 10% next year in the US and UK.” Credit Suisse expects borrowers in the UK to be hit harder by rising interest rates than the US because the “overwhelming majority of US mortgages” are fixed for 30 years while most UK borrowers fix their interest rates for between two and five years. Elsewhere, the Office for Budget Responsibility believes prices will fall 9% over the next two years. Meanwhile, Karen Ward, chief market strategist at JPMorgan Asset Management, has ruled out a “doom loop of construction activity contracting massively, people getting into negative equity and consumer behaviour really changing because of the housing market.” 

The Daily Telegraph (12/12/2022)