Housing market weathered high interest rates

As the Budget approaches, attention is shifting to potential interest rate cuts by the Bank of England. David Smith in the Times argues that the housing market and the economy have coped much better with high interest rates in recent years than some commentators had feared. He says: "House prices did not crash but, on the official measure, fell by a mere 3.7% from peak to trough and are now back above where they were two years ago." Measures of housing activity such as mortgage approvals have also recovered well, an upturn which continues. Smith also notes that the structure of the housing market has changed, with less than half of owner-occupiers owning mortgages, and older households owning outright. He suggests the shift to predominantly fixed-rate borrowing has softened the impact of rising rates, allowing borrowers more time to adjust.

The Times (09/10/2024)