There is a strong expectation that there will be fewer homeowners choosing to move home either by upgrading as their family has grown or downsizing as it matures, and children move on to grow their own family homes. By choosing to stay put, homeowners could slow down the natural flow of the housing market. Without starter homes as homeowners upgrade, fewer will be available for first-time buyers. This will increase demand for newly built first-time buyer type homes which would push prices higher. This is also a burdened trend for first-time buyers as they have been turning to homes in need of repairs, upgrades, and improvements to find one they can afford. 

There is concern about whether supply can meet demand for housing, either for buying or renting, and for buyers it is becoming more difficult to purchase while rental costs are expected to outgrow house prices next year.

The strategy for the coming year could be for homeowners to stay put rather than purchase another home. They are finding it to be a risky choice as they might find it difficult to buy again due to affordability. 

Interest rates have resembled a roller coaster this year. In the beginning they went on a quick decline as it was expected the Bank of England’s Monetary Policy Committee (MPC) would make the first reduction to the standard base interest rate in the start of 2024. When inflation proved stubborn, the forecast for a rate cut was postponed to early spring, then it was early summer. All the while, interest rates would reduce and increase only to be reduced and increased again.

The expectation of a rate cut in either August or September brought about lender rates that were below the forecasted first cut of 0.25% to 5.0%. Lenders offered rates below 4.0% and a cut had yet to be voted on, but it did happen in August with the base rate cut to 5.0% and the lender rates stayed low, until the budget announcement neared.

Some lenders responded to the upcoming budget release with caution and pulled their lowest rates. After the budget, it was expected another rate cut might occur and lenders responded. Better rates appeared and the second base rate cut by the MPC happened in November. 

However, after the November rate cut, the inflation report for October revealed inflation had grown from below the budget of 2.0%, at 1.7%, to above budget at 2.3%. 

The expectation of a third-rate cut was dashed, and the December MPC meeting will now likely result in a majority vote to hold the rate steady. This will keep the base rate through January with the next meeting to be held in February 2025.

Despite an optimistic outlook for the economy next year, homeowners are weary from the sixteen-year high base rate of 5.25% that remained in place from September 2023 till August 2024. Prior to that, they experienced the base rate rising from 0.1%, almost zero, in December 2021 to more than double at 0.25% followed by a rate hike during every MPC meeting until it was held steady at 5.25% in September 2023. 

The optimism in the economy is not enough to erase last year’s warnings of homeowners falling into negative equity or higher interest rates causing affordability issues. Nor will it ease the fears of the ever-rising average house price, which is drastically different in only four years. According to the UK House Price Index, the average house price in the UK in October 2020 was £245,000, while the average UK house price in October 2024 is around £293,999. 

The base rate in October 2020 was 0.1%, an all-time historic low, and lenders offered their own historically low interest rates. The base rate of October 2024 was 5.0%, and despite lowering in November to 4.75%, the changes in the cost of borrowing in a relatively brief period of four years is not easily disregarded. This is why homeowners may choose to stay put and rather than take on a new home, a new mortgage, and face the housing market, but would rather shop for remortgage.

Remortgaging is going to be favorable for homeowners as there are incredibly attractive deals available. The most popular remortgaging in recent months has been for a fixed rate at longer terms, which might be an insight as to the stability and security homeowners are interested in finding.

Experts encourage homeowners to shop for a remortgage online no matter where they are in their mortgage term, for the information could be motivation to get a new deal or provide insight as to what could be expected in the future when the time to remortgage arrives at the end of their current term.

The ability to remortgage could offer savings and even peace of mind with a fixed rate to lock in the homeowner’s chosen rate. There is also the possibility cashing out built up equity could release funds to upgrade and improve the property to save even more if the money is used to make it energy efficient, which in turn could also increase the property value.

Homeowners could very well decide that staying put is the new strategy for the upcoming year and a remortgage more favorable a choice than a new mortgage.