The latest data from Nationwide Building Society has been released and it reveals that the UK housing market has kept interest from home buyers but could be slowing. House prices rose in May faster than they had in April with a 0.9% increase versus the 0.4% recorded for April. However, the annual rate declined slightly to 11.2% in May from the 12.1% recorded in April, which was attributed to lower house prices than the same time last year.

In April, UK mortgage approvals fell to the lowest level since June 2020 according to data released by the Bank of England. It could be the start of a slowdown according to experts. It could also be a natural correction following the boost that occurred after the first few interest rate hikes by the Bank’s Monetary Policy Committee (MPC). Those that had hoped to buy, but were waiting on the fence for one reason or another were motivated to shop and buy quickly to avoid having to pay more expensive interest rates. Of course, fewer approvals could also point to some home buyers being shut out of the market, particularly first time home buyers.

Homeowners are shopping for remortgages and there is a good reason that demand is so high for remortgage lending. The Bank of England’s Monetary Policy Committee (MPC) has been responding to the high rate of inflation by increasing the standard base interest rate. It has been raised in the last four consecutive MPC meetings. What was the lowest ever interest rate in the 300 plus year history of the Bank in December of last year of 0.1% has been increased to 1.0%. 

The housing market is still quite busy. The demand is strong as home buyers are still inquiring as to available properties through agents and online listing sites. Supply in the market is low, but competition for properties is evident when shopping for property. Activity in the market could be evidence that there are buyers seeking to secure their purchase before more interest rate hikes occur and borrowing becomes more expensive. 

The UK housing market is expected to begin a slowdown, but not just yet. The demand for property is still high with numerous reports from property listing sites, estate agents, builders, and lenders revealing another record high in UK housing prices. This is despite the increase of inflation, the continued impact of the pandemic, higher energy and fuel costs, and higher borrowing costs. 

It was expected. The average house price showed growth in the current May report released by Rightmove. With yet another increase by the Bank of England’s Monetary Policy Committee (MPC) in their last meeting, it was expected there would be a rush to buy. Rather than pay perhaps even more with the next rate hike or face higher offers from lenders, buyers took action and entered the market with a serious intent to buy. The average house price reflected the strong demand, but it was higher than could have been predicted due to the four consecutive standard base rate hikes by the MPC.