The UK economy recorded unexpected growth in March despite the outbreak of war in Iran.
GDP grew by 0.3% against analysts’ predictions that there would be a small contraction.
However, the impact of the war is expected to be more keenly felt in future readings.
Phoebus Software sales and marketing director Richard Pike says: “However you view the latest figures, the UK economy is near stagnant with only modest growth since the start of the year, and uncertainty around interest rates and inflation levels confidence is in short supply.
“That said, most mortgage businesses I speak to are still doing great volumes.
“This uncertainty, including political instability in Westminster, has sent bond yields surging to near 20-year highs this week and sent the pound and equity markets falling.
“This will put pressure on the cost of capital across the economy, including mortgage rates.
“Although we have seen some product rate cuts recently, there’s a good chance that mortgage borrowing will become more expensive in the short term and put continued pressure on household finances.
“The country and the markets need the government and the Bank of England to do all it can to steady the ship, but how achievable that is with the current incumbent in No 10 remains to be seen.”
TwentyCi chief executive Colin Bradshaw says: “A stronger-than-expected GDP performance reinforces the picture of a UK property market that has so far remained more resilient than many anticipated.
“Given the current global backdrop, including continued instability in the Middle East, many expected confidence across housing and mortgage markets to deteriorate more sharply.
“Instead, our data continues to show a market that is still growing compared with 2024, although momentum has moderated in recent weeks.
“There are still clear pressure points.
“Mortgage pricing volatility linked to higher swap rates has led to significant product repricing across the market, and many borrowers are once again facing fixed rates above 5%.
“Inflation risks are also reducing expectations of imminent interest rate cuts, keeping affordability under pressure.”
He adds: “Our forecast remains 1.2 million transactions in 2026.
“While geopolitical risks remain elevated and conditions could shift quickly, the current evidence suggests the housing market is cooling gradually rather than entering a significant downturn.”
