House prices: What happens when they fall?

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How could rising interest rates affect the housing market around the UK?

After the mini-budget, financial markets were forecasting that the Bank of England's interest rate would rise above 6% in 2023.

As a result, loans leave more room for prices to fall before borrowers are stuck with negative equity. Most recent borrowers have also had their ability to pay checked against interest rates even higher than the ones we're seeing at the moment. Repossessions were suspended from March 2020 to April 2021 and, even in the year since restarting, have remained below 4,000. That compares with more than 20,000 in the years just before the 2008 crash.In the last two years, prices rose steeply - by about a quarter - across most of the UK.

 

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