There had been hope of a cut by the Bank of England’s Monetary Policy Committee (MPC) to the standard base interest rate by early spring. As inflation held on, optimism declined and the forecast was for one possibly in June. However, now it is more likely to be in August according to experts. Lenders had been cutting their own offerings, but as the expectation for a June reduction of the base rate has been replaced with one later, lenders have begun to raise their rates.

According to a recent report from Rightmove, mortgages rates are lower than they were a year ago. The cheaper lender rates have come onto the lending market without a cut in the standard base interest rate by the Bank of England’s Monetary Policy Committee (MPC). The reasoning for the lower rates is due to the optimism for inflation to reach target and the committee to vote for the first cut to the base rate since March 2020. The lower lender rates available are an opportunity for borrowers to secure deals that would likely appear when the MPC does cut the rate.

There are many homeowners that will come to the end of their mortgage term in 2024. When their term expires, they will either shop for a remortgage or they will allow their lender to transition them to their standard variable rate (SVR). Avoiding the SVR could bring savings as it is normally a much higher interest rate than found with a remortgage. However, there are unique circumstances this year and homeowners may be trying to create a strategy of wait and see. Interest rates are high, yet there are expectations of lower rates to come. Homeowners might believe a SVR is a good choice to wait out for rate cuts to the lowest interest rate remortgage, but they would be paying more than necessary with no savings to be found.

According to a recent report from Nationwide, the UK housing market is doing well despite continued high interest rates. Home buyers are paying attention to the market and the average house price has grown by 0.4%. The April average of £261,962 grew to £264,249 in May with home buyers choosing to move ahead in their purchases without waiting for the expected cut to the standard base interest rate by the Bank of England’s Monetary Policy Committee (MPC). 

Homeowners could be throwing away money. In the hopes of waiting out for lower interest rate offers in remortgaging, they have bypassed securing a new deal and allowed their lender to move them to their standard variable rate (SVR). Waiting for lower rates could be costing their household budget dearly. According to a recent report, almost a third of homeowners have taken on a SVR. Some may have forgotten to remortgage, or avoid it for they felt it would be hard and stressful, while others are holding out for lower rates before they remortgage. The report revealed they are likely spending an average of £278 a month unnecessarily.

The largest hurdle to homeownership is buying in today’s market and it has not been harder to climb the property ladder than it is now. Interest rates are high, despite having declined recently as lenders become more competitive. Asking prices have continued to climb on top of the pandemic lifestyle buying frenzy and supply in the housing market is low. Coming off an inflation stress that reached double digits has made it difficult to save for a deposit.