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. 

The data released from Halifax is the fourth consecutive month of house price increases. The increase in the average house price between December and January grew to 1.3% bringing the average UK house price to £291,029. The year-to-year comparison difference between January 2024 and January 2023 is 2.5%.

Kim Kinnaird of Halifax Mortgages remarked, “The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market, has contributed to increased confidence among buyers and sellers. This has resulted in a positive start to 2024’s housing market.”

Nationwide also reported an increase in their house pricing data of 0.7% month on month for January.

The lending market has been reacting differently to mortgage lending versus remortgage lending. With the risk of lending seen as higher for homeowners versus home buyers, lenders have begun pulling their lowest remortgage rates while continuing to lower mortgage rates.

It is expected that homeowners could run into affordability issues as many fixed rate mortgage terms end this year and are replaced with either a remortgage or if not, then an higher rate standard variable rate (SVR). Homeowners with two-year mortgage deals coming to an end could be leaving behind rates offered when the Bank’s base rate was under 1.0% and as low as 0.25% which remained throughout January 2022. They will then be forced to pay on rates of today, which are substantially higher, with the base rate currently at 5.25%.

The next meeting of the MPC is in the last half of March on the 21st. The next inflation report will come on 14 February. Homeowners in need of a remortgage have a hard decision to make. On the one hand, they could take advantage of the unexpected lower rates offered by lenders that do appear to be disappearing or wait for the inflation report and the next MPC meeting. Rates could be even more favorable or higher.

Forecasting the future weeks of lending will be hard, at least until the next inflation report is offered. The inflation report released in November revealed a drastic and optimistic decrease to 3.9% and closer to the Bank’s target rate of 2.0%. The report in December revealed a slight increase in inflation of 0.1% to 4.0%. 

The actions of the MPC are intended to control inflation. The increase could be a slight hiccup in the efforts and a direct result of the energy cap instated, or it could be that the current rate is not the peak rate required to curb spending and take inflation to target.

Homeowners are encouraged to shop for a remortgage online. It is fast and easy to do and with remortgage quotes in hand, a homeowner could determine the best choice looking ahead. Visiting the website of a remortgage broker is a one stop shopping experience as a homeowner could obtain numerous quotes from a variety of remortgage lenders. Brokers often have exclusive deals from lenders not offered directly to borrowers. Of course, homeowners could also go from lender site to site to gather quotes to review and compare.

While the experts are trying to center in on the correct forecast over the next few days and weeks, it provides the perfect time for homeowners to gather information on remortgaging, review quotes and build a strategy to save money and grasp financial stability in an ever changing and evolving economy.