What's going on?
Data out on Tuesday showed that British house prices took an unexpected leap in February.
What does this mean?
The housing market took a serious hit last year, when the Bank of England’s interest rate hikes pushed mortgage rates through the roof. See, with the cost of loans suddenly too hot to handle, folks found that they no longer had the cash – or even the desire – to take the home-owning plunge. But the picture brightened a little in February: mortgage rates dipped from their peak, British consumer confidence ticked up, and the job market held firm. That might help explain why British lender Halifax saw UK house prices climb 1.1% from January to February, confounding economists’ predictions of a 0.3% drop.
Why should I care?
Zooming in: Bringing down the house.
Best not declare victory yet, mind you: despite that slight climb, house prices are still trending downward in the long run – and with mortgage rates close to a ten-year high, that’s no big surprise. What’s more, Halifax’s data is sharply at odds with rival Nationwide, which claimed just last week that house prices dropped in February. (That sounds like a head-scratcher, but each lender bases its calculations on its own loans, so conclusions differ now and then.) Add on that fewer sales are being agreed these days, and most experts still think house prices will slide this year.
The bigger picture: Irate about rates.
UK households could be in for even more pain. While the Bank of England hinted that British interest rates might have peaked, its pal across the pond said on Tuesday that US rates would probably climb even higher than folk expected. Problem is, the prospect of higher rates makes a country’s currency more attractive to international savers and investors, which might be why the pound plunged versus the dollar after the news – a move that’ll make importing more expensive and squeeze Brits even harder.