By the middle of next year, hundreds of thousands of young homeowners could be in financial trouble with their repayments according to the Financial Conduct Authority (FCA). Younger homeowners to age 34 are more likely to have difficulty due to higher interest rates. Yet, the FCA is not the only experts calling for homeowners to prepare for more financial strains before relief comes from a more stable economy. There have been many calling for homeowners to get familiar with their current mortgage and consider a remortgage to offer savings rather than pay more than necessary.

Homeowners are in need of help in this current economic environment. First, the pandemic took a toll on household budgets, then it was higher energy costs, inflation reached a 40 year high, and now interest rates are higher than they have been in over a decade. It should be noted that only over a year ago, interest rates were at historic lows from lenders, but now those cheap rates are long gone. In an effort to protect the household budget, experts are encouraging all homeowners to shop for a remortgage and that means putting aside any loyalty to the current lender in an effort to find the best deal.

The forecasts concerning the peak of inflation as well as the possible peak of the Bank of England’s standard base interest rate has been wavering rather than holding. In other words, no one can predict for sure what is ahead. At one point, only a few months ago, it was thought the base rate set by the Bank could reach 6% or higher. More recently it was predicted the rate could perhaps be at its expected high. Now, that is not so certain, and the Bank of England’s Monetary Policy Committee (MPC) could possibly have many more rate hikes ahead. This is not good news for borrowers, including home buyers and homeowners.

One of the most common news stories to be found these days is the impact of higher interest rates on the housing market. It matters, especially now that we are days away from the next meeting of the Bank of England’s Monetary Policy Committee and another possible hike to the standard base interest rate. If the rate is indeed increased, it will be the eleventh consecutive meeting of the MPC to result in an increase to the base rate. It will raise the base rate above the current 4.0% and reach a level not seen by a large number of hopeful homebuyers and it will cause financial strain to many homeowners.

Evidence of the rise in property values has been revealed as the total value of UK housing stock reached a record high of £8.7 trillion in 2022 according to data released from Savills. However, the value increase to 2022 was smaller at only 5% than had been recorded in the previous two years. This could be a sign of a future decline in the market and it is likely to occur this year. 

Homeowners are being told to stay alert to the UK housing market. Rightly so because if house prices begin to sink, then so could property values and that could impact homeowners in many ways, including making them a prisoner to their current mortgage. If property values decline below the amount of debt owed, then they are in negative equity and out of reach of a remortgage. Since a remortgage could offer savings and shield from further rate hikes, it could lead to financial difficulties hard to escape if one is unable to remortgage.