There is a growing consensus that mortgage interest rates will soon be heading south as house sales show signs of gaining momentum.

Nationwide reports that although UK house prices fell 0.2% last month, the annual rate of house price growth edged higher to 1.6%, up from 1.2% in February.

Relatively subdued sales activity largely reflects the impact of higher interest rates on affordability. However, the bank expects a sales upturn as cost-of-living pressures ease along with an improvement in housing affordability.

It adds that if these trends continue, activity is likely to gain momentum, although the pace of recovery is still likely to be heavily influenced by the trajectory of interest rates.

Gavin Richardson (pictured), MD at MFB, tells LandlordZONE that while the money markets arestill very sensitive to wider geo-political events, lenders should be able tohedge their bets and prices for mortgage rates could start to ease up over thenext few months.

“Withhouse prices now tentatively on the rise, the market is turning a corner andfor the better,” says Richardson. “Tenant demand is still high, so landlordsshould look to snap up new investments before property prices fully recover andremortgage existing properties from high lender reversion rates onto newcompetitive mortgages.”

Downwards

Mark Harris (pictured), chief executive of mortgage broker SPF Private Clients, says buyers and sellers have been more active since the start of the year as it appears the base rate has peaked, and that the next move in rates will be downwards. However, he adds that affordability is still an issue for many.

“There are likely to be ups and downs in mortgage pricing in the weeks and months ahead as lenders jostle for position and business but there is a growing feeling of optimism that the situation is improving overall,” says Harris.

The dip in house prices certainly detracts from the initial positive signs of market recovery, according to James Briggs (pictured), head of intermediary sales at mortgage lender Together, who believes there should still be ample opportunities for anyone wanting to get a foot on the housing ladder - given the lower-than-expected inflation figures, and early indications that rates are starting to creep down.

“There’s also no let-up in the desire from would-be property owners,” adds Briggs. “Indeed, increased confidence among buyers, sellers and property professionals suggests the property market is now finally moving in the right direction.”