November housing market data revealed the forecasts for a declining market are transpiring. It was inevitable that affordability would damper the hopes of home buyers as well as ever growing inflation and uncertainty in the economy. According to Nationwide, the average house price fell at the fastest rate in 2.5 years, with much of the blame on the mini-budget announcement that caused many homebuyers to pull out of already made deals. The average house price dropped from October by 1.4% to £263,788.

The decline in November data marks the third consecutive month of falling house prices. 

The annual data revealed a fall in house growth to 4.4% in November which was a significant decline to the growth which had been reported at 7.2% in October.

Robert Gardner, Nationwide chief economist, remarked, “While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum. Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation.”

The inflation rate reported in October was at 11.1%, the highest since 1981. It is much higher than the Bank of England’s target rate of 2.0%. This is a strong indicator that more interest rate hikes are in the near and distant future. It is thought the Bank’s Monetary Policy Committee (MPC) will take the standard base rate from the current level of 3.0% to at least 5.0% to bring inflation under control in 2023.

Home buyers are not the only ones being impacted by higher interest rates and therefore more costly borrowing. Homeowners are being warned to prepare for a shock to their household budgets as rates rise. 

Those that secured a fixed rate deal before the rates began to rise last December will have locked in their interest rate and escaped the impact of the rising rate impacts. However, as their term ends, they will be facing different rates than when they secured their previous deal.

Those that choose to not remortgage at the end of their term will be moved to their lender’s standard variable rate (SVR) which could have a homeowner paying on an interest rate double or more what could be found with a remortgage. Rather than paying more than necessary, experts encourage homeowners to remortgage and do all they can to secure a rate offered now rather than face rising rates on a SVR.

The ability to remortgage at current rates is causing some homeowners to take on a penalty fee to end their terms early rather than possibly face much higher rates when their terms were due to end.

It is simple to determine what remortgaging opportunities are available by shopping online. Visiting the website of a remortgage lender could put a quote into hand to review in a matter of minutes. There is also the benefit of visiting a remortgage broker where a homeowner could receive numerous quotes from a variety of lenders to review and compare. Brokers might also have exclusive deals available, so shopping with them could be a smart strategy.