In the wake of two interest rate increases by the Bank of England’s Monetary Policy Committee (MPC) in December and February, hopeful home buyers rushed to shop and buy. According to a recent report by Zoopla, the UK house price increased by 8.1% in the twelve months to February. In comparison to February 2021, there was a 4.2% increase. The increase is impressive, but was slightly lower than the increase in January which was 8.4%.

It is expected that March data will show yet another increase, due to the fact the MPC increased the standard base interest rate a third time in the third consecutive meeting held on 17 March.

Inflation is more than three times the level of the target 2.0% set by the bank. Experts describe the expected inflation rate of spring to be higher than in four decades. The war in Ukraine is having an impact on inflation and the global economy, as is the continued impact from the pandemic.

There is still a lack of supply of homes in the housing market, but more are coming onto the market. The demand will likely far outweigh the supply as the desire to buy is still very strong and had grown remarkably during the pandemic amidst lockdowns. 

The average house price has grown and broken records month after month due to the strong demand. Now with higher interest rates making borrowing more expensive, it is expected that the demand could begin to decline. 

The Bank’s interest rate might have climbed from almost zero at 0.1% in December to 0.75% by March, which is more than a three times increase, but it is still very low. It is after all, under 1.0% and at that level it is still a consideration when one is considering a major purchase such as a home. Lenders of course, have interest rate levels that reflect the rate of the Bank and their offerings are still very attractive to borrowers, especially home buyers. 

The low rate mortgage lending is not only attractive to buyers, but homeowners as well as many have purchased second homes or chosen to move home with an upgrade or downsizing choice from the housing market. Homeowners that have stayed put are also showing demand in borrowing and are discovering substantial savings and benefits through remortgaging.

The data as to the housing market and home buyers for March will not be available for a few weeks, but according to property listing sites, like Zoopla, the demand is strong and is likely to be for months to come.