The Bank of England’s Monetary Policy Committee (MPC) will gather for the last meeting of 2023 on Thursday. It is expected the members will hold the standard base interest rate steady at 5.25% due to the recent decline in the inflation rate. The MPC set base rate reached 5.25% in August and has remained so through votes in September and November. The same choice will likely result in December, but there are those that would hope for a rate cut.

Homeowners are struggling according to the results of a recent poll of advisers by Mortgage Solutions. A large number of Help to Buy homeowners are having difficulty remortgaging according to 71% of the advisers. In another report, this one by The Telegraph, there is a large number of first-time home buyers that have slipped into arrears with the number doubling over last year to 4,845. There are many reasons that could explain the hardship of first-time buyers meeting their repayments, but there could also be blame for the fact that some would have not taken into consideration what would happen when interest rates increased.

In today's challenging economic landscape, UK homeowners are facing a perfect storm of financial pressures, from the lingering effects of the pandemic to soaring energy costs and inflation that grew to a 40-year high. Adding to the complexity, interest rates surged to levels not seen in over a decade. Just two years ago, historic low rates were prevalent, but now, savvy homeowners are urged to explore remortgaging as a strategic move to safeguard their household budgets. This is especially so for those close to having their mortgage term end and those who have had it end and without a remortgage were transitioned to their lender’s standard variable rate (SVR).

The economy may be headed toward healing and normalizing in regards to inflation, but the gains toward stability of the economy have yet to reach consumers. The financial struggle of households is still very much that, a struggle. The global pandemic took its hits, followed by double digit inflation, and higher interest rates caused more woes for borrowers. The shock to household budgets has been particularly hard due to higher costs in borrowing. In fact, it was recently reported that homeowners in mortgage arrears had increased by 24% over the same time last year. 

Asking prices for UK homes next year will be slightly lower than they are now according to the forecast offered by Rightmove, the largest online property website in Britain. The expected 1% decline will be the product of higher interest rates and the continued impact of inflation. This time around last year, the prediction was for prices to fall by 2.0% in 2023. However, the decline in the average asking price for a home is 1.3% lower than last year. The lower asking prices will likely be seen as less than a sign of a weaker economy, but more of a needed correction to the housing market’s pandemic boost.

The UK housing market is not to be discounted in its ability to stay resilient. Not Brexit nor a global pandemic could tear it down or hold it back. Even in a global pandemic it not only stayed afloat, but it also left forecasters scratching their heads as they watched their expectations fall like ashes amidst the burning demand in the market. Hopeful home buyers are going to find a way, no matter the short-term challenges that a bump in the economy might bring.