 set out its forecast following Jeremy Hunt's budget this morning, and it doesn't paint a bright picture. They said we are already in recession, which is set last more than a year and will see another 505,000 become unemployed. Things will be so bad that it will 'wipe out the previous eight years' growth despite over £100 billion of additional government support', a report said. Looking at house prices, the report said they are forecast to fall by 9% between the fourth quarter of 2022 and the third quarter of 2024, 'largely driven by significantly higher mortgage rates as well as the wider economic downturn'. Prices are set to remain below their current level over the next five years. They said average interest rates on the stock of outstanding mortgages will peak at 5% in the second half of 2024, the highest since 2008. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video But they will fall back slightly to 4.6% by the end of the forecast. Compared to 2007, more people are now on fixed rate mortgages so any change in interest rates on people's average payments takes a while to feed through. They said that they expected house prices to settle at around 7 times earnings from 2025. But they cautioned that 'there is significant uncertainty over this forecast given the sensitivity of house prices to mortgage rates and the recent volatility in the bond yields that drive pricing in the mortgage market'. Government support this year and next adds 3½% on average to household incomes. But even so, living standards are set for the largest fall on record this year. And real incomes per person fall 7% over the 2 years to 2023-24, wiping out the previous 8 years’ growth. pic.twitter.com/JskoUxk33D— Office for Budget){kind=link}
NEWS… BUT NOT AS YOU KNOW IT
A grim forecast for the UK predicts that house prices will drop by 9% due to more expensive mortgages and the biggest drop in living standards since records began.
The Office for Budget Responsibility (OBR) set out its forecast following Jeremy Hunt’s budget this morning, and it doesn’t paint a bright picture.
They said we are already in recession, which is set last more than a year and will see another 505,000 become unemployed.
Things will be so bad that it will ‘wipe out the previous eight years’ growth despite over £100 billion of additional government support’, a report said.