The Office for Budget Responsibility (OBR) has outlined its forecasts for house prices, inflation, mortgage rates and interest rates following yesterday’s Budget.
House prices
House prices are expected to rise by 15% over the forecasted period from 2024-2030, according to the OBR.
CPI inflation
Having fallen back to around the 2% target in mid-2024, the OBR expects CPI inflation to pick up to 2.6% in 2025, partly due to the direct and indirect impact of Budget measures. Inflation then slowly returns to the 2% target by the forecast horizon.
Bank Rate
From its current level of 5%, Bank Rate is expected to fall to 3.5% in the final year of the forecast.
Mortgage rates
Average interest rates on the stock of mortgages are expected to rise from around 3.7% in 2024 to a peak of 4.5% in 2027, then remain around that level until the end of the forecast.
