In a striking prediction, economists are forecasting a dual shift in the UK’s financial landscape for 2024: a reduction in interest rates coupled with a 5% rise in house prices.
According to a survey of 41 economic experts by The Times, the consensus is for at least two cuts in the Bank of England base rate this year. Remarkably, nearly half of the respondents anticipate three or more reductions. This comes despite the base rate currently holding steady at 5.25%, a figure maintained consistently last year by the Bank’s monetary policy committee. The Bank’s governor, Andrew Bailey, has cautioned that it’s premature to consider any rate reductions, yet only two economists from the survey foresee the base rate remaining unchanged.
The expected interest rate adjustments are set against a backdrop of declining inflation, which has fallen to 3.9%. It is further projected to move closer to the Government’s 2% target in the coming months. The anticipated decrease of 0.4% in average two and five-year fixed mortgages is predicted to significantly influence the market.
On the property front, a noteworthy uptick in house prices is anticipated for 2024. Pantheon Macroeconomics and The Times report an expected 5% increase in house prices. Supporting this view, Andrew Wishart, a senior property economist at Capital Economics, suggests that a fall in house prices might be “avoided altogether”, indicating a stable or upward trend in the property market.