Annual UK house price growth halves as mortgage rates rise – business live

If the Bank of England signals rate cuts in response to cooling housing demand and broader economic softness, gilt yields could fall and sterling could weaken, potentially supporting equity valuations in rate-sensitive sectors like housebuilders and consumer discretionary stocks.

Continued modest house price growth alongside elevated mortgage rates would likely sustain the current equilibrium in UK financial markets, with housebuilder stocks and mortgage lenders trading within established ranges while consumer spending remains constrained by higher debt servicing costs.

A sharper contraction in house prices or a cascade of mortgage defaults triggered by further rate rises or economic deterioration would put downward pressure on bank equity valuations, increase financial stability concerns, and likely trigger a flight to safety in gilt markets as recession fears intensify.