The UK housing market is feeling the pressure from higher interest rates. As the Bank of England’s Monetary Policy Committee (MPC) began hiking the standard base interest rate last December, hopeful home buyers remained. Many were taking the opportunity to buy before rates grew higher and thus more expensive. Since the first increase, the base rate has risen from almost zero at 0.1% to 3.0%. The action by the MPC is meant to put a halt to the growth of inflation, and that could take months into next year which means more rate hikes to come.

Despite rising interest rates, there is some good news for homeowners. Some lenders have reduced their interest rate offers. When the mini budget was announced in late September the markets reacted, including the lending market. Lenders raised interest rates in reaction and pulled their lowest offers. It left hopeful home buyers facing paying more and some facing affordability issues to the point of pulling out of purchasing deals. Homeowners with variable rates faced higher repayments and those that sought remortgages saw the best offers disappear overnight.

Rising interest rates have created a sense of urgency for homeowners to learn all they can about remortgaging. It is an often overlooked opportunity when interest rates are low, as they have been for a few years. However, when rates are rising, it certainly should be on the top of every homeowner’s priority list to shop for a remortgage deal and determine what benefits could be available to save money.

November housing market data revealed the forecasts for a declining market are transpiring. It was inevitable that affordability would damper the hopes of home buyers as well as ever growing inflation and uncertainty in the economy. According to Nationwide, the average house price fell at the fastest rate in 2.5 years, with much of the blame on the mini-budget announcement that caused many homebuyers to pull out of already made deals. The average house price dropped from October by 1.4% to £263,788.

The UK lending market faltered during the month of October and likely due to the mini budget. An amazing 10% fewer mortgage approvals than in September occurred. The Bank of England reported 59,000 down from the previous month’s 66,000. According to data, more than 40% of the housing market activity disappeared as home buyers were left without the ability to buy due to affordability and pulled out of their deals.

The UK housing market is showing signs of cooling off. Since the pandemic’s race for space buying frenzy, house prices have been growing. There were numerous times last year when the average house price would reach a new high with each month. The rising house prices have helped push home values to quick gains, but it also pushed many hopeful home buyers out of the market. As interest rates began to rise, the combination of both the rate hikes as well as high priced properties was expected to put off buyers.