More than half expecting interest rates to rise

A rise in the number of people expecting interest rates to increase has failed to dent confidence in the outlook for house price growth, according to the latest Halifax Housing Market Confidence Tracker.

According to the Halifax, 58% of people now believe mortgage interest rates will be higher in 12 months’ time, compared to 48% in quarter 2. In addition 35% expect savings interest rates will be higher – an increase from 26% at the end of the last quarter.

However despite these statistics, and the fact that house price inflation is now running at 9%, 68% now expect the average property price to be higher this time next year, and just one in 20 people think prices will be lower.

Halifax mortgage director Craig McKinlay said: “While economic optimism appears to have tailed off in the last quarter, house prices have continued to increase and the underlying pace of house price growth is strong.

“This has helped to maintain the expectation that house prices will continue to rise, despite more people expecting interest rate rises in the next 12 months.

“The factors behind the upward pressure on house prices include the continued lack of second-hand properties for sale on the market and the availability of low mortgage rates.

“Without an increase in supply it’s likely to mean that house price growth continues to be robust in the short-term, even if interest rates eventually begin to increase.”

However despite the apparent stability in house price expectations, there has also been a drop in selling sentiment, with the proportion who believe the next 12 months will be a good time to sell falling seven percentage points to 52% from 59% in quarter two.

There has also been a further fall in the proportion of Britons who think it will be a good time to buy in 12 months’ time, from 56% in quarter two to 53% in quarter three.

Just 40% of people in London said they thought the next 12 months would be a good time buy, compared to 77% in Scotland and 58% in the north of England.

Conversely, 64% of people in London said the next 12 months would be a good time sell, compared to 48% in Scotland, 47% in the north of England and 43% in the midlands.

Raising a deposit remains the number one barrier to buying property (57% mention this) despite the availability of higher loan to value mortgages and the Help to Buy Scheme.

The number of people citing job security as a barrier has fallen to its lowest ever level (42%) but it is still the second most mentioned factor, ahead of household finances (36%).

Despite the continued rise in house prices, the percentage citing rising prices or prices being too high has fallen from 35% to 31% in the last three months.

And despite the swing in terms of people expecting to see an interest rate rise in the next 12 months, the percentage of people who cite concerns about interest rates rises as a barrier is little changed – it is currently 14%, compared to 16% in Q2.

 

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