The housing market in the UK is again showing how resilient it can be as house prices are increasing despite continued higher interest rates. Not only are interest rates higher than only two years ago, but the average asking price remains at a level straining home buyers as they try to get on the property ladder. First-time home buyers are especially impacted as they are finding it hard to buy with higher prices and higher borrowing costs as well as attempting to save for a deposit following a global pandemic and double-digit inflation. 

Being loyal to one’s current mortgage lender is understandable. They gave the opportunity to buy the home, or remortgage. They gave the approval and made it possible. Also, there is the comfort and lack of stress in staying loyal rather than considering a change in lender. However, experts encourage homeowners to highly consider leaving behind loyalty to their lender and in doing so, they will likely find savings and yet another lender in which to build a relationship.

There are over a million homeowners expected to come to the end of their mortgage term this year. For those with two-year fixed rate deals expiring, the financial sting of losing out on their current rate could hurt deeply. In 2022, rates were much more affordable as they were on the rise from the lowest base rate recorded in over 300 years. In January 2022, the rate was 0.25% having increased the previous month from the historic low of 0.1%. By April 2022, the base rate was 0.75%. The current standard base rate set by the Bank of England’s Monetary Policy Committee (MPC) is 5.25%.

Homeowners and home buyers will be either satisfied or not concerning the fact there is not a scheduled Bank of England Monetary Policy Committee (MPC) this month. The last meeting, held in March, resulted in the committee members voting to hold the standard base interest rate at 5.25%. It was the fifth consecutive MPC gathering that resulted in a vote to hold the rate steady. However, it was the first time in two years no member voted for a rate hike. The majority voted to hold the rate, but one voted to cut the rate. The base rate of March will remain till May, so there is no rate cut this month.

The housing market is set to strengthen and demand in mortgage lending will also bring about a greater supply of mortgage products and perhaps more competitive rates according to recent survey data released by UK Finance. The poll was conducted between 26 February and 15 March, during a time in which the meeting of the Bank of England’s Monetary Policy Committee (MPC) had yet to meet on the 21st and the latest inflation report had not yet been released which occurred on the 20th of March. The survey revealed 19% of lenders expected the supply of mortgages to increase in the next quarter which is the highest data response since early 2021.

Becoming a homeowner is hard. At least this is the case for more than one third of first-time home buyers. According to information released by the Office for National Statistics (ONS), between April 2022 and March 2023, 36% of first-time buyers had used financial gifts to purchase their first home. Twenty years ago, only 20% relied on financial gifts to purchase their first property. Another 9% reported relying on inheritance to climb onto the property ladder, while only 3% reported twenty years ago depending on their inheritance to become a homeowner.