If you are a home seller, it is going to be easier to find a buyer if you put a starter home on the market. First time home buyers are choosing from smaller properties, even ones in need of care or upgrades and improvements. Higher priced and larger homes are going to stay on the market longer because homeowners are not moving home as they had before, preferring instead to stay put rather than upgrade to a more expensive property while interest rates are more costly. According to recent data from Halifax, first time buyers are in search of smaller properties than they were when the pandemic lifestyle was the main driver of home buying.

Last week, the Bank of England’s Monetary Policy Committee (MPC) voted to keep the standard base interest rate at 5.25% for the sixth consecutive meeting. The sixteen-year high interest rate has made borrowing more expensive and becoming a homeowner more difficult. It has also made it more difficult for homeowners to afford their homes. Despite a possible rate cut or two this year, rates are still far from what could have been imagined only two years ago.

As expected, today the Bank of England’s Monetary Policy Committee (MPC) met and voted to keep the standard base interest rate at the 16-year high of 5.25%. Their decision is based on the fact the current report on inflation reveals it at 3.2%. The expectation is for inflation to decline in the next report much closer to the target rate of 2.0%. Had the MPC meeting come after the May update on inflation, perhaps a cut might have occurred if indeed it does drop nearer to target. The MPC had to vote according to the information at hand versus the expected inflation data that will be available on 22 May. 

According to experts, homeowners no longer should fear declining into negative equity. This occurs when the property value falls below the debt on the property. When in negative equity, the homeowner will be out of reach of a remortgage until they bring the debt below the property value. Without access to a remortgage, a homeowner coming to the end of their current mortgage deal will be transitioned to the lender’s standard variable rate (SVR) and will be paying more and could have saved if they had access to a remortgage and a likely substantially lower interest rate.

On Thursday, the Bank of England’s Monetary Policy Committee (MPC) will meet to make a decision on the standard base interest rate. According to economists, the expectation is for the majority vote to hold the rate steady. Inflation was last reported at 3.2%, still far from the Bank’s target rate of 2.0%. This is unfortunate for borrowers, for not only will they still face higher interest rates, but inflation is still above target and it will take some time before the relief from inflation is felt. 

There is almost zero chance the Bank of England’s Monetary Policy Committee (MPC) will cut the standard base interest rate this month. The next meeting is on 9 May and will likely end with a majority vote for keeping the rate steady at 5.25%. Inflation is dropping, but not yet at the Bank’s target rate of 2.0%. It is nearing the point where the rate will be cut, but not likely until early autumn. Expectations are for at least one rate cut of 0.25% by the end of the year.