In the tumultuous economic landscape of today, UK homeowners find themselves besieged by a confluence of financial challenges. Some are still recovering from the financial aftermath of the pandemic and inflation has taken a toll. This time last year, the inflation rate had reached double digits. Compounding these woes, interest rates have soared to levels unprecedented in over a decade. Merely three years prior, historic lows prevailed, but now, astute homeowners are advised to delve into remortgaging as a strategic shield for their household budgets. This urgency is particularly pronounced for those nearing the end of their mortgage term or those who've already reached it and, without a remortgage, have been shifted to their lender’s standard variable rate (SVR).

First time buyers are not having an easy time of it in the UK housing market. House prices are elevated, and borrowing is expensive. Saving for a deposit, according to a recent report, could take fifteen years or more for the average first time buyer. Along with saving for a deposit, hopeful home buyers are dealing with inflation. However, buyers are finding ways onto the property ladder, and some are doing so in creative ways.

As would be expected, the housing market has benefitted from the lower interest rate offerings available with mortgages. Despite the Bank of England’s Monetary Policy Committee (MPC) voting to hold the standard base rate steady for four consecutive meetings, lenders have taken it upon themselves to lower their offerings to attract the attention of borrowers. Some rates have fallen below the current base rate of 5.25%. Hopeful home buyers have taken advantage of the offerings, and the housing market has achieved the highest average house price increase since October 2022. 

Homeowners needing a remortgage are encouraged to begin shopping for a new deal or they could miss out on the current opportunities and benefits available now. In the past weeks, lenders have become optimistic and competitive in their offers dropping some interest rates below the current standard base rate of 5.25%. However, as recently released data and statements have made it clear that the rate could stick for a good while, lenders are changing their offers to reflect the forecasts and expectations for the economy and lending.

The first meeting of the year for the Bank of England’s Monetary Policy Committee (MPC) occurred on 1 February. Following a slight increase of 0.1% of the inflation rate in December which moved it to 4.0%, double the Bank’s target rate of 2.0%, the committee voted to leave the current base rate at 5.25%. The current rate is the highest since 2008, however the meeting offered insight into the forecast for a possible rate cut later in the year as inflation is expected to drop below target in May.

The latest data from Nationwide reveals another positive month for the UK housing market. The average house price increase was the strongest growth in a year. The Nationwide housing index reported a 0.7% increase in January over the previous month’s reported 1.8% decrease for December. The average house price rose to £257,656, and while there was a month-to-month increase, there was a 0.2% decline from January 2023.