First time buyers are not having an easy time of it in the UK housing market. House prices are elevated, and borrowing is expensive. Saving for a deposit, according to a recent report, could take fifteen years or more for the average first time buyer. Along with saving for a deposit, hopeful home buyers are dealing with inflation. However, buyers are finding ways onto the property ladder, and some are doing so in creative ways.

As would be expected, the housing market has benefitted from the lower interest rate offerings available with mortgages. Despite the Bank of England’s Monetary Policy Committee (MPC) voting to hold the standard base rate steady for four consecutive meetings, lenders have taken it upon themselves to lower their offerings to attract the attention of borrowers. Some rates have fallen below the current base rate of 5.25%. Hopeful home buyers have taken advantage of the offerings, and the housing market has achieved the highest average house price increase since October 2022. 

Homeowners needing a remortgage are encouraged to begin shopping for a new deal or they could miss out on the current opportunities and benefits available now. In the past weeks, lenders have become optimistic and competitive in their offers dropping some interest rates below the current standard base rate of 5.25%. However, as recently released data and statements have made it clear that the rate could stick for a good while, lenders are changing their offers to reflect the forecasts and expectations for the economy and lending.

The first meeting of the year for the Bank of England’s Monetary Policy Committee (MPC) occurred on 1 February. Following a slight increase of 0.1% of the inflation rate in December which moved it to 4.0%, double the Bank’s target rate of 2.0%, the committee voted to leave the current base rate at 5.25%. The current rate is the highest since 2008, however the meeting offered insight into the forecast for a possible rate cut later in the year as inflation is expected to drop below target in May.

The latest data from Nationwide reveals another positive month for the UK housing market. The average house price increase was the strongest growth in a year. The Nationwide housing index reported a 0.7% increase in January over the previous month’s reported 1.8% decrease for December. The average house price rose to £257,656, and while there was a month-to-month increase, there was a 0.2% decline from January 2023. 

The Bank of England’s Monetary Policy Committee (MPC) will meet for the first time in 2024 on Thursday. The 1 February meeting will be watched closely by experts, lenders, and borrowers with most expecting a majority vote to hold the rate steady. It would mark the fourth consecutive meeting for the rate to stay at 5.25%. The minutes will reveal how many of the committee made up the majority of the vote. A few distractors from holding the rate steady will likely be a vote for a hike versus a cut to the current rate.