Unpredictable interest rates could spell upheaval for housing market

A new survey - going against the trend of other housing market studies - suggests that house prices could rise six per cent by next autumn if mortgages stay unchanged.

Using the latest government house price data and the current APR rate of 5.3 per cent GoCompare has calculated that homeowners can expect to see an increase of just under six per cent in the value of their homes by autumn next year. 

However, a one per cent rate rise to 6.3 per cent would mean a 4.66 per cent decrease in completion price value.

If mortgage rates instead fall another per cent to 4.3 per cent homeowners could see a huge 10.5 per cent added to their house price. 

This would increase the average house price from £291,385.00 at the beginning of September 2023 to £321,968.00 just one year later – a rise of over £30,500.

If interest rates fall by one per cent, mortgage repayments would also become cheaper. The monthly repayments on the average house price next autumn would total £1,753 per month.

Whereas, if rates stay the same, monthly repayments would work out at £1,859, a difference of £106 every month.

Ceri McMillan, home insurance expert at Go.Compare, says: “With so much disruption in the housing market, homeowners are facing uncertainty over housing costs. Many are wondering how interest rates will affect the value of their homes as well as their monthly repayments, as many have seen a jump in their outgoings.

“While nothing is certain, our prediction aims to give homeowners and buyers an idea of what could happen to house prices next year. Our data shows that as mortgage rates rise and fall, this correlates to the completion value of homes. If mortgage rates continue to increase, homeowners may see lower completion prices.”