Two official publications in the space of a week have set out how the UK housing market looks going into 2027. The Office for Budget Responsibility’s forecasts, published alongside the Autumn Budget on 28 October, and the Bank of England’s November Monetary Policy Report, published with the decision to raise Bank Rate to 4%, describe a market that has cooled in recent months but is still expected to grow modestly.
In short: The OBR forecasts house price growth of about 2% in 2026 and 2.5% in 2027, with transactions rising from about 1.2 million in 2026 to 1.3 million in 2031. The Bank of England reports that mortgage approvals fell 8% in the three months to September and that quoted mortgage rates rose by around 60 basis points ahead of its decision.
What does the OBR forecast for house prices?
As summarised by Propertymark, the OBR’s Budget forecasts include:
- House prices: growth of about 2% in 2026 and 2.5% in 2027.
- Mortgage costs: the average effective mortgage interest rate rising from 4% in 2026 to about 5% in 2031.
- Activity: property transactions rising from about 1.2 million in 2026 to 1.3 million in 2031.
Forecasts are not guarantees, and the OBR’s figures were prepared before the Bank of England’s November decision.
What does the Bank of England’s data show?
The November 2026 Monetary Policy Report records a softer picture in the most recent data:
- Mortgage approvals fell by 8% in the three months to September.
- House prices fell by 0.8% in the three months to August.
- Quoted mortgage rates at 75% and 90% loan-to-value rose by about 60 basis points as markets priced in higher Bank Rate.
Taken together, the two sources point to short-term softness alongside modest growth expected over the forecast period.
What does this mean for property investors and borrowers?
Refinancing assumptions
If effective mortgage rates drift higher over the coming years, as the OBR projects, the terms available on refinance may differ from those assumed when a purchase was planned. Exit plans for short-term finance are usually stress-tested against realistic, not best-case, refinance terms.
Slower transactions
Fewer approvals can mean longer sales and more broken chains. Short-term finance is one of the tools some buyers use to complete a purchase while a sale or refinance is still in progress, as our Bridging Trends Q2 2026 review discussed.
Policy dates to note
Higher property income tax rates from 6 April 2027 and the High Value Council Tax Surcharge from April 2028 are fixed dates that may influence when some owners decide to buy, sell or restructure.
Frequently asked questions
What is the UK house price forecast for 2027?
The OBR forecasts house price growth of about 2.5% in 2027, following about 2% in 2026.
Are UK mortgage approvals falling?
The Bank of England reports that mortgage approvals fell by 8% in the three months to September 2026.
Are mortgage rates expected to rise?
Quoted rates rose by around 60 basis points ahead of the November decision. The OBR projects the average effective mortgage rate rising from 4% in 2026 to about 5% in 2031.
Important information
Ponte Finance PLC is a private lender, not a bank, and is not authorised or regulated by the Financial Conduct Authority. Lending is for business purposes only and is not available to consumers or for property occupied, or to be occupied, by the borrower or a family member as a home. All loans are secured against property, and the property may be repossessed if repayments are not maintained. This article is for general information only and reflects publicly available data at the date of publication. It does not constitute an offer of finance, a forecast, or financial, investment, tax or legal advice. Ponte Finance PLC is registered in England and Wales, company number 15859004, registered office 225 Clapham Road, London SW9 9BE.