The countdown leading up to the next Bank of England’s Monetary Policy Committee (MPC) meeting has begun. Next week, the MPC will meet and decide on the state of the economy and discuss inflation. The result will be either another rate hike or allow the rate to remain steady. There is little to no chance of a rate cut. The expectation is for the rate to be increased by at least 0.25%, but more possibly 0.50% because while inflation has declined, it is still far from the target of 2.0%.

The latest data released on remortgage trends has revealed that homeowners might be hoping for rate cuts in the near future. Most remortgaging homeowners in May had chosen five-year fixed remortgage deals, but in June it shifted from 50% to 46% as more borrowers picked two-year fixed rate deals. While five-year fixed rate remortgages were still the most popular, 38% had chosen a two-year deal. Perhaps the small drop in homeowners choosing five-year deals is thought to be optimism that inflation is coming under control and in two years when their deal ends the offered deals will be attached to favorable interest rates.

In another sign that the housing market is changing, the latest news from British homebuilders is the plan to build fewer homes as they expect high mortgage rates to slow down demand. The lack of first-time buyers is likely to be the most absent group from the housing market. Not even government schemes that have helped in the past to put home buyers into new starter homes such as the Help to Buy scheme would be enough to make buying affordable, so say experts.

Homeowners have had financial pressure due to higher interest rates. Those not on fixed rate mortgages have been dealing with rising repayments. Those that did secure a fixed rate are likely to face more expensive borrowing when their mortgage term ends. This is especially true for those that obtained two-year fixed mortgages ending this year. Those deals were offered when interest rates were historically low, but ending this year will make them disappear and leave homeowners shopping from interest rates higher than in over a decade.

The Bank of England’s Monetary Policy Committee (MPC) has been battling against inflation since December 2021. It was then the MPC chose to increase the standard base interest rate from its historic low for the first of what would be thirteen consecutive meeting votes to hike the rate. It has risen from almost zero at 0.1% to the now level of 5.0%. The quick transformation of the lending market has left borrowers struggling and perhaps the most impacted have been homeowners.

Homeowners should pay attention once again to the warnings growing more troublesome from experts. There had been the call for caution of possible surging interest rates, that lending would tighten and some homeowners would find it harder to qualify for a remortgage than it had been to mortgage. All of those things have occurred and are getting even more worrisome.  Now the warning is to remortgage before you cannot for property value declines could be on the way as it would push many homeowners into negative equity.