Goldman Sachs upgraded its growth forecasts as a result of its new interest rate expectations.
The smaller blow to household finances means UK GDP is now expected to grow by 0.6pc this year, up from a previous forecast of 0.5pc. The economy is expected to expand by 1.3pc in 2025, upgraded from 1pc.
Separately, figures from the Bank of England showed the rate paid on new mortgages edged up at a much slower pace in November, raising hopes that the worst may now be over for homebuyers. The average rate rose by 0.09 percentage points to 5.34pc, a smaller increase than was seen in October and September.
Thomas Pugh, economist at RSM UK, said: “If house prices haven’t quite reached their lowest point, they’re probably not far off it. Indeed, now that attention has firmly turned to when interest rates will start to fall and mortgage rates have started to drop, the housing market is likely to stabilise.
“A gradual rebound in housing transactions this year will also support an economic recovery later this year.”
While expectations of falling interest rates are already lowering costs for homeowners, savers are losing out.
The typical interest rate paid to savers locking their money away for a fixed period dropped from 5.27pc in October to 5.07pc in November. This was the first drop since the Bank of England began raising borrowing costs in December 2021.
