Possessing a time machine would be nice, not only for personal and emotional reasons, but for many it would be used to return to the moment their financial situation tipped toward struggle. The initial tipping point is often subtle. There are of course moments where one’s financial downfall is like a rug being pulled from beneath one’s feet, but many have it happen in small incremental moments. It appears that this one or the next setback will be difficult but manageable. Homeowners are dealing with that specific scenario, and it is leading to more and more mortgages falling into arrears.

The housing market is evolving due to the higher borrowing costs as the Bank of England’s Monetary Policy Committee (MPC) raised the standard base interest rate during fourteen consecutive meetings. During the most recent meeting last week, the MPC kept the rate steady breaking the long streak of raising the rate. It rests at 5.25% and will remain so until at least the next MPC meeting in November.

For some time, experts have been shouting to the rooftops concerning the need to consider a remortgage, but not everyone has heard the warning or reacted. At the end of a mortgage term, a homeowner has the option to remortgage and if they pass on the opportunity they are moved to the lender’s standard variable rate (SVR). It is considered risky and is more expensive to be moved to a SVR and should be avoided to save money. A remortgage will likely be attached to a lower interest rate and of course, there is also the option of securing another fixed rate to shield against further rate hikes. 

In a surprise move, the standard base interest rate held at 5.25% after the Bank of England’s Monetary Policy Committee (MPC) meeting on Thursday. The experts and others forecasted a 0.25% increase that would have put the rate at 5.5% in September. However, the rate held ending the consecutive meeting increases that had lasted through fourteen meetings since December 2021. The rate is now considered the possible peak rate and will be allowed to work against inflation.

The current economy is unfriendly to many, but homeowners might be the most pressured. They have struggled to survive the gloom and doom of Brexit only to enter a global pandemic followed by double digit inflation. The household budget has been under attack from unusual sources. No one could confidently predict what would occur during Brexit, or the pandemic, or the recovery high inflation economy to follow. Homeowners could be teetering on the edge of affordability or sitting along the sidelines hoping for the best and a break in their difficulties and worries.

Signs are pointing to a slower UK housing market. Interest rates are higher and set to rise again in days. Demand has slowed as estate agents reported fewer inquiries in a recent poll. Now, in a new sign of a housing market losing its robust momentum that was surprising experts only a year ago, asking prices are being cut by sellers. According to Rightmove, an online property listing site, the highest number of sellers have cut their asking prices since 2011. More than 36% of properties are now listed at a lower price than they were previously.