In another sign that the housing market is changing, the latest news from British homebuilders is the plan to build fewer homes as they expect high mortgage rates to slow down demand. The lack of first-time buyers is likely to be the most absent group from the housing market. Not even government schemes that have helped in the past to put home buyers into new starter homes such as the Help to Buy scheme would be enough to make buying affordable, so say experts.

Homeowners have had financial pressure due to higher interest rates. Those not on fixed rate mortgages have been dealing with rising repayments. Those that did secure a fixed rate are likely to face more expensive borrowing when their mortgage term ends. This is especially true for those that obtained two-year fixed mortgages ending this year. Those deals were offered when interest rates were historically low, but ending this year will make them disappear and leave homeowners shopping from interest rates higher than in over a decade.

The Bank of England’s Monetary Policy Committee (MPC) has been battling against inflation since December 2021. It was then the MPC chose to increase the standard base interest rate from its historic low for the first of what would be thirteen consecutive meeting votes to hike the rate. It has risen from almost zero at 0.1% to the now level of 5.0%. The quick transformation of the lending market has left borrowers struggling and perhaps the most impacted have been homeowners.

Homeowners should pay attention once again to the warnings growing more troublesome from experts. There had been the call for caution of possible surging interest rates, that lending would tighten and some homeowners would find it harder to qualify for a remortgage than it had been to mortgage. All of those things have occurred and are getting even more worrisome.  Now the warning is to remortgage before you cannot for property value declines could be on the way as it would push many homeowners into negative equity.

There is a current rush to remortgage. The latest meeting of the Bank of England’s Monetary Policy Committee (MPC) pushed the standard base interest rate up by 0.50% to 5.0%. Lenders had already begun to pull their cheapest products before the meeting, but afterwards there were even less available deals on the lending market to choose from for home buyers and homeowners. Now the forecast is for another rate hike of 0.50% and for further rate hikes beyond.

Brexit was followed by a global pandemic, and lockdowns. There was financial stress and unknowns with the pandemic, and for many there were deep personal stresses. As we emerged from the pandemic, there were supply chain issues that caused difficulties that would have to be endured. Next inflation started, and it grew and took more from household budgets that had already been strained for years. Perhaps, the only good financial outcome in the past few years was the historically low interest rates. The cheap rates brought about the possibility of homeownership for many, an upgrade to a dream house for others, and a large profit from a home sale to cushion a homeowner’s senior years as they downgraded and sold their home for a price unexpected by experts in the middle of a pandemic.