The UK housing market has been in rapid movement upwards for a long time and during a time when it was unexpected. The global pandemic had been expected to slow down most markets, including property buying. However, it sparked strong demand from home buyers. First time buyers and home movers were buying rapidly and in markets that had received little attention such as those in the country due to buyers seeking property with more space. 

Households are facing financial strains from many areas. Fuel and energy costs are causing issues and inflation is taking extra out of pockets on more and more goods. Borrowing is more expensive as well with the Bank of England’s Monetary Policy Committee (MPC) increasing the standard base interest rate upward during each of the last three consecutive meetings. Due to the tightening on consumers, the risk in lending is also higher and this could be setting in place a tighter lending environment for borrowers making it not only more expensive but harder to come by.

Home buyers are not going away, at least not yet. The drive to buy property may have been spurred by the global pandemic, and in some cases it could still be the motivator for buying, but there are more factors at work now pushing the buying demand. The biggest push to buy is likely to escape rising interest rates. Therefore, as much as there is a demand for buying, there is perhaps a demand for borrowing before it becomes more expensive.

Homeowners are seeking the opportunity to remortgage as a path to escaping higher interest rates. According to several reports, more homeowners with many months left in their current term are in search of remortgages. Rather than face the interest rates that will be available when their terms expire, they are instead choosing the opportunity to remortgage now and obtain an interest rate level that could be cheaper. 

Many homeowners are unaware of how a remortgage could benefit their household budget. Inflation is putting a hardship on consumers and to control the rising inflation rate, which is currently more than three times the level of the target set by the Bank of England, the Monetary Policy Committee (MPC) increases the standard base interest rate. Paying on loans with higher interest rates increases the cost of borrowing. For homeowners, due to the high amount of borrowing, paying a higher interest rate could be a hard hit to one’s budget.

Homeowners took notice of the warnings of rising interest rates at the end of last year and sought out remortgages. The high demand could have been kicked into high gear when the Bank of England’s Monetary Policy Committee (MPC) chose to hike the standard base interest rate during their December meeting. The expectation had been that the rate would be increased soon and perhaps in the first quarter of 2022. However, inflation grew at such a rate that the MPC took action sooner and the rate hike of December caused homeowners to become aware of the need to remortgage or face higher rates and pay more than necessary.