In news leading up to the next meeting of the Bank of England’s Monetary Policy Committee (MPC), there could be reason to take a deep breath and exhale for those hoping for financial relief. Inflation has long remained stubborn and reached double digits, which was far from the target rate of 2.0%. This required the MPC to make increases to the standard base interest rate. Starting in December 2021, and through to last month, there have been 14 consecutive meetings that resulted in a higher interest rate.

The final months of the year are going to shape the housing market data and will likely reveal a shift in the market that was inevitable due to more expensive borrowing from higher interest rates. According to Zoopla real estate company, the volume of houses sold in the UK this year will be the lowest annual figure since 2012. The forecast is for a 21% decline in sales for 2023 compared to 2022. 

Homeowners are seeking remortgages and they are doing so to save money despite higher interest rates. When a homeowner’s mortgage term ends, they lose their current deal and must seek a new one. That is why remortgaging is important and why now experts are encouraging homeowners to take time to shop for a new deal. Homeowners at the end of their term have the choice between a remortgage or they can allow the lender to move them to their standard variable rate (SVR). Avoiding a SVR is usually the better strategy, as it is normally a higher interest rate and therefore more expensive borrowing than the rates offered with remortgages.

The latest report from Nationwide has revealed house prices have fallen 5.3% year on year which is the largest annual decline since 2009. The annual decline for an average home amounts to £146,000. The monthly decline amounted to 0.8%. The average house price according to Nationwide’s House Price Index is £259,153, which is less than the July average of £260,828 and much less than the average last August of £273,751. There are many concerns about this being yet another sign the housing market could be on a long downward trend.

Home buyers finding it hard to get onto the property ladder due to higher interest rates, and higher asking prices, and due to the difficulty in saving for a deposit are turning to the Bank of Mum and Dad and even extended family members to assist. In a recent study by Legal and General (L&G), family members are expected to help in 318,400 property purchases this year. Close to 47% of properties bought by home buyers under the age of 55 will get financial assistance from family members with their purchase.

While homeowners have been warned for awhile now as to the need to prepare for higher interest rates, it has been renewed as the Bank of England’s Monetary Policy Committee (MPC) is due to gather in less than a month to possibly raise the standard base interest rate for the 15th consecutive meeting. Already the rate has caused affordability issues for many homeowners, and there is little relief ahead as there are more rate hikes to come as inflation remains above target. Even a slight increase in the rate could amount to hundreds of pounds more per month for some homeowners.