House prices need to fall more than 10% to counteract rate rises

Interest rate rises will push up monthly mortgage costs so much that even a 10% house price fall will not make homes cheaper to buy than at the start of the pandemic, new analysis shows. In January 2020, before the pandemic hit, a typical couple spent 17% of their pre-tax salaries on their monthly mortgage payments, according to Pantheon Macroeconomics. This was below the average of 18.5% for the preceding 20 years, as low interest rates meant mortgage payments were comparatively cheap. Since the Bank started raising rates in December 2021, the share of salary needed to cover the mortgage payments on an average home has risen to 20.6%. This is the highest since September 2008, during the global financial crisis. Pantheon expects the share to peak at 23.5% in September. The Daily Telegraph