Homeowners should be alert as to the latest reports surrounding the data released by Halifax on the housing market. Most experts are commenting the data points to a strained market throughout next year. This could put pressure on those homeowners with little equity built into their property, this would be fairly new homeowners or those that have cashed out their equity feeling confident in the housing market months and a few years past. The Halifax report revealed that the September annual average house price declined by 4.7%, followed by the August report that experienced a 4.5% fall. 

The house prices reported by Nationwide have declined in every region of the UK. The average house price in September 2023 is 5.3% less than the same month last year. The house price index in August revealed a 0.8% fall. At almost £14,500 less, the average house price reported by Nationwide is £257,808. The average house price decline could be a strong indicator that the housing market might not have faired well had another hike been applied to the standard base interest rate by the Bank of England’s Monetary Policy Committee (MPC).

The Bank of England reported UK mortgage approvals declined in August in comparison to last year. It was the lowest level in half a year and the blame is likely due to higher interest rates. The cost of borrowing has not only caused affordability issues for first-time buyers, but a change in house shopping habits. Where during the height of the pandemic there was a race for space as work for home caused a need for more room and lockdowns made homes with more outdoor green space the pandemic dream house, it was all more possible due to historically low interest rates. Now borrowing is much more expensive, and because even starter homes can be too pricey, first-time home buyers are becoming DIY homeowners and showing stronger demand for overlooked lower priced fixer upper homes.

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.