House prices are expected to continue to rise throughout the first quarter of the year. Supply is extremely low and demand remains high. Experts believe that the continued low interest rates are helping to motivate buyers. In some cases, the continued pandemic is pushing buyers as the desire for space remains a top priority. The possibility of rising rates could also be a motivator as hopeful home buyers take action now that the cost of borrowing is becoming more expensive than it was only weeks ago. However, it could be the simple fact that rental costs are rising.

According to recent reports, rental costs have outpaced mortgage costs in some areas of the UK. 

The property listing website Rightmove reported that the average house price has increased by £852 in one month. Also, January 2022 has proved to be the most active which confirms the trend of buying despite a pandemic is still in progress.

The average asking price for a home in Britain is now £341,019. The average house price is being driven upward by the strong demand for more spacious and larger homes. This is a side effect of the pandemic and lockdowns. More space has been strongly desired to make life comfortable to work from home, study from home, get fit, take on new hobbies, entertain, and for some buyers green space has been important for safely being outdoors for family and pets.

Experts believe that the continued impact of the pandemic will help fuel buyers even if the worry of lockdowns is a far off possibility. It could offer peace of mind within the uncertainty of the pandemic, and with low interest rates the opportunity to borrow cheaply is not to be overlooked.

As might be expected, the current boost in the market could be triggered by the Bank of England’s Monetary Policy Committee (MPC) having increased the standard base interest rate in December. The next MPC meeting is in February. With inflation’s continued climb there is a real possibility of yet another interest rate increase. In an attempt to secure an interest rate now rather than after rates rise, home buyers could be looking to take action sooner rather than later in the housing market.

The news that the housing market is still seeing strong demand will be a relief to homeowners as they have been able to watch their property values increase by amounts astounding to even the most optimistic expert. 

Homeowners, too, have been able to take advantage of the low interest rates available and save money with remortgaging. Also, with strong equity growth many homeowners have cashed out their equity through an equity cash release remortgage. The money could be used for whatever the homeowner desires and many have reported their intent was to upgrade and improve their home.

Should borrowing costs increase next month, it could slow down the housing market, or it could cause yet another boost as those waiting to take action rush to buy. Meanwhile, homeowners will likely continue their strong demand for remortgaging as many are close to or will have their current mortgage term end soon. Rather than pay more than necessary on a lender’s standard variable rate (SVR) or more should interest rates keep rising, homeowners are expected to seek a remortgage in strong numbers.

Interest rates might increase not once, but several times this year. Home buyers and homeowners seeking to borrow at today’s low interest rates are encouraged by experts to consider their needs, speak with experts, weigh the benefits and opportunities available and do so with expectations that the interest rates of today might not be here much longer.