Although its latest trading update in October did little to dispel the gloom surrounding the new housing sector, shares in the UK’s leading developer Barratt Developments (BDEV) have rallied sharply in the last few weeks and are currently hitting new 12-month highs.

While private reservations have tumbled and the firm issued a much lower build target for the full year, Barratt shares have been boosted by the change in expectations for UK interest rates and all of a sudden are now up more than 30% for the year.

Whereas over the summer the consensus was for rates to top 6% and stay at that level for the whole of 2024, by the autumn the market began to bet instead on the Bank of England holding rates steady at the current rate of 5.25% for an indefinite period.

More recently, expectations have risen that the Bank may even cut interest rates in mid-2024, meaning mortgage rates will continue to come down, encouraging first-time buyers back into the market and reviving sales.

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