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House prices and interest rates – what could the future hold?

The cost of living increases, especially energy, prompted by the economic costs of two years of Covid-19 are also being accompanied by interest rate increases, while would-be home buyers watch asking prices for property continue to increase.

To all intents this is a perfect storm for consumers, but likely first-time home buyers and those wishing to trade up are going to find it harder to make the transition. According to the Nationwide, a typical property now costs a record £29,162 more than it did a year ago, which represents the largest cash increase since the Society started collating property data in 1991.1

The rise, which equates to a 12.6% increase across the housing market, is continuing to surprise industry experts. It would be expected that with pressure on household budgets along with rising inflation, the housing market would have quietened down, but in reality, property values are being driven by an imbalance between the meagre size of property supply being outstripped by the demand from prospective buyers, which is still as positive as it was last year.2

How long it can continue is still a matter of conjecture.  As household cost increases begin to bite, demand is likely to subside. The other factor is the rise of interest rates. After the rise in inflation, the Bank of England has had to raise the bank base rate, which of course has had a knock-on effect on the availability of continuing low mortgage rates2.

According to Moneyfacts, standard variable rate mortgages have seen the largest single monthly rise since they began recording statistics. Opting for a fixed rate mortgage is becoming a real alternative to keep costs under control, but even fixed rates are also showing rate increases too, with 2-year fixed rate deals showing their largest increase since 2015.3

At the same time, product choice is shrinking with lenders revising and condensing their product ranges. While there are still over 4,800 products on the market, a monthly fall of 518, if continued, would represent a significant reduction in choice.4

For those readers who are still on their lenders’ standard variable rate or are coming to the end of their fixed rate period, now is a good time to seek professional mortgage advice and let us talk you through the options available to suit your circumstances.


1 – BBC (2022) House prices see record cash rise, says Nationwide. Available at: (Accessed 29th March 2022)

2 – Bayliss, J (2022) RICS Residential Market Survey. Available at: (Accessed 29th March 2022)

3 – Williams, E (2022) Moneyfacts: SVR Mortgage Rates Post Biggest Ever Monthly Rise. Available at: (Accessed 29th March 2022)

4 – Financial Conduct Authority (2022) Mortgage Lending Statistics 2022. Available at: (Accessed 29th March 2022)

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