The property market was thrown into chaos after Chancellor Kwasi Kwarteng delivered his Mini-Budget last month - with mortgage rates rocketing as a result.
Lenders were spooked after analysts predicted that interest rates will rise to 6%, off the back of the pound falling to an all-time low against the US dollar.
More than 1,000 mortgage deals were pulled from the market as a result - with many now returning at a much higher rate.
The markets now expect the Bank of England base rate to peak at around 5.25% to 5.5% in 2023, after the Chancellor was forced into a U-turn on one of his major Mini-Budget proposals.
Mr Kwarteng had announced plans to abolish the top tier 45% income tax rate after the move was criticised as only helping the 1% of workers who earn above £150,000.
This now won’t happen - but mortgage rates are still climbing and have been going up since last December.
Have you put your property dreams on hold after mortgage rates began rising? Let us know: mirror.money.saving@mirror.co.uk
The Bank of England hiked its base rate to 2.25% at the end of last month - its highest level in 14 years and seventh increase since December when the rate was 0.1%.
If you have a tracker mortgage, your monthly repayments will move in line with the base rate - meaning you’re paying more for your mortgage.
Most standard variable rate (SVR) deals will also become more expensive, although it is down to your lender to decide whether they put up your rates.
If you have a fixed-rate mortgage, then you’ll be protected from any rises until your current deal comes to an end.
The issue with this is, homeowners will face paying thousands of pounds more when they come to remortgage due to how much rates have risen.
Earlier this week, the rate on a typical two-year fixed rate mortgage breached 6% for the first time in 14 years, according to Moneyfacts.
But what does all this mean for house prices - and will they drop next year?
What rising mortgages could mean for house prices
Latest figures from Land Registry data show the average UK house price was up 2% on a monthly basis in July 2022 and now stands at £292,118.
There are other house price indexes to take into account as well - each of them offer different average figures.
The Rightmove index released in September says house prices rose by just 0.7% in one month, while the Nationwide index showed prices had flatlined, with no change on average.
Halifax released its latest house price index today, which claimed property prices fell by 0.1% between August and September.
Experts generally believe house prices have been cooling for some months now - as the cost of living crisis makes it harder for people to save money.
The stamp duty holiday that came into effect during the coronavirus crisis had also pushed up prices previously, as buyers rushed to complete before the tax break ended.
Of course, no one knows for sure how house prices will change over the next few months - but we've spoken to some experts to get their opinion.
Right now, it is predicted that prices could fall by up to 20% in some areas.
Graham Cox, director of the firm Self Employed Mortgage Hub, said: “Unless we are very lucky and inflation falls much more quickly than predicted, I don’t see any other outcome than a sizeable fall in house prices – possibly 20%-plus over the next two to three years.
"I’ll be accused of being a doom-monger, but if you use simple maths and common sense, how can house prices not fall?"
Tom Bill, head of UK residential research at Knight Frank, also predicts that house prices will fall over the next two years.
He said: “It’s a fairly safe bet that UK house prices have now peaked. The impact of rising mortgage rates will begin to hit demand and spending power in coming months, which we believe will lead to a fall of 10% over the next two years for UK prices.
"We may see mortgage rates fall to some extent if financial markets become more reassured by the government’s economic plan but the events of the last fortnight have been a reminder that the era of ultra-low rates is coming to an end."
However, other experts suggest demand is still strong enough to avoid house prices crashing - and they don't think the drop will be this big.
Mark Lawrinson, operations director of residential sales at Essex-based estate agent Beresfords, said: "While there has been negative news relating to the pound and the wider economy, this has not translated to the housing market and there are no signs that the market will crash.
"Our current projections are however showing that the rate in which property price increases will be more subdued over the next six to 12 months."
Property Adviser and Managing Partner of Hoxton Property, James Stanton, also predicts the new stamp duty cut will help house prices.
"Yes, there will probably be a softening of the market next year, perhaps a flatlining of prices, but it's unlikely to be a full blown crash," he said.
"We should think of it more like a reversion to the norm."
Buyers should always seek professional advice from a reputable mortgage provider when they're looking to purchase their first home or move.
