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LONDON REPORT BEST OF THE BROKERS Higher interest rates tipped to accelerate UK house price decline
from Monday 3 July 2023
by cityam
HIGHERinterest rates are set to accelerate UK house prices’ decline, new figures in what will be a quiet week for markets are expected to reveal.
Analysts at consultancy Oxford Economics reckon Halifax’s house price data on Friday will show they dropped 2.5 per cent over the last year and 0.1 per cent over the last month.
That would be a much steeper drop than May’s one per cent annual fall.
Sellers are finding it harder to source buyers due to mortgage racing ahead over the last month to more than six per cent. That jump made it much less affordable to finance a house purchase.
Mortgage providers have been passing on the Bank of England’s 13 successive interest rate rises, designed to tame inflation. Britain’s official interest rate is now at five per cent, a 15 year high.
City traders will be starved of any meaningful news this week as markets approach the typically quieter summer period.
Across the pond, minutes from the Federal Reserve’s latest interest rate decision meeting will be released on Wednesday. They are likely to provide information on why the federal open market committee chose to pause its aggressive rate hike campaign for the first time in more than a year.
In the UK, final purchasing managers’ index numbers will be released throughout the week. Analysts don’t think there will be much change from the initial readings that showed the private sector is growing. But, any further evidence of inflationary pressures hanging around via growing wages or cost pressures could raise the prospect of another 50 basis point increase from the Bank in August.
