UK house prices have slowed according to the recent release of data by Nationwide. Annual growth for the month of October was 2.4%, down from the two year high reported in September of 3.2%. This was unexpected as little changed from the prior month in mortgage rates and there remained the forecast for another rate cut by the end of the year. Worry about the housing market is misplaced as there is a strong boost to the housing market expected in the new year as the stamp duty changes motivate home buyers to take advantage of savings and buy.

Next week the Bank of England’s Monetary Policy Committee (MPC) will be meeting for the first time since their September meeting. It was in August that the standard base interest rate was cut for the first time since March 2020. The majority vote by the committee took the sixteen-year high base rate from 5.25% to 5.0%. The September meeting resulted in a vote to stay the rate, but the expectation was for at least one more rate cut by the end of the year, leaving that possibility for November or December since there was not a meeting scheduled for October.

Loyalty is a virtue which we would like to see more of in the world, but alas, it has no place in our financial world as it once did for personal mortgage lenders. Long ago one might have had a lengthy relationship with the lender that said yes to their first mortgage. In helping a homeowner find their way onto the property ladder, the lender would likely have a lifelong customer and perhaps even generations of customers. However, holding onto that mindset could be costing homeowners money in today’s world and having them paying more than necessary.

It is the last weekend of the month of October. This is an obvious marker that the holiday season is coming quickly upon us and a new year will be a part of it. The year will close out with more hope for a better economy ahead, with at least most if not already feeling some relief will soon, as inflation has dropped below the target rate. Wage growth, lower inflation, and the expectation of cheaper borrowing costs are promised ahead. However, to make the most of opportunities available now and into the next year, it will require action and for homeowners the motivation to save should inspire them to take advantage of current opportunities.

With all the talk about the unexpectedly low remortgage and mortgage rates available from lenders due to the competitive lending environment that was developed around the expectation of the first MPC rate cut since 2020, the discussion is now on rate increases. Yes, increases. The expectation of the first cut spurred lenders to reduce their rates to attractive levels that could not be ignored by borrowers. After the Bank of England’s Monetary Policy Committee (MPC) voted to cut the standard base interest rate in August, rates were slashed further. Some fell below 4% despite the base rate reaching just 5.0% after the 0.25% reduction. 

Homeowners are taking advantage of the same lower cost borrowing that is fueling demand in the UK housing market. The opportunity to remortgage is not being pushed aside in favor of being transitioned to their lender’s standard variable rate (SVR) to await lower rates in which to choose a new deal. The expectation of lower rates is due to the forecasts of another cut to the standard base interest rate by the Bank of England’s Monetary Policy Committee (MPS). While there is normally a seasonal boost in remortgage lending during the autumn, it is likely the ability to obtain an lower than expected remortgage interest rate is part of the motivation to seek a new deal.