The UK housing market is set to experience an absence of buyers not seen in years. During the pandemic, rather than leaving the market due to lockdowns and other difficulties, hopeful home buyers adapted and sought out their pandemic lifestyle dream homes. The housing market flourished and supply could not keep up with demand in areas where there was plenty of space both inside and outside the home. The city life gave way to the cottage and country lifestyle. Now, with rising interest rates, and the standard base interest rate set by the Bank of England’s Monetary Policy Committee (MPC) at a 14 year high, inflation still in double digits, and a possible recession on the horizon, home buyers are expected to put off their homeownership dreams and follow a path of caution.

The expectation of falling property values has become more of a reality with the latest forecast for the mortgage lending market. Mortgage demand could hit a 12 year low as hopeful home borrowers find it more difficult to climb onto the property ladder. Not only are home buyers facing higher asking prices that remain from the rush to buy during the pandemic, but higher interest rates have become more expensive with the Bank’s rate the highest in 14 years. Saving for a deposit has also been hampered due to higher energy costs and inflation. Due to the difficulty in saving being impactful to so many, even the Bank of Mum and 

For the first time in 14 years, the Bank of England’s Monetary Policy Committee (MPC) has raised the rate to 4.0%. This past Thursday, the MPC voted to increase the standard base interest rate by 0.5%. It marks the tenth consecutive meeting the rate has been increased. Despite the meeting resulting in a base rate increase, there was some optimistic news such as inflation may have peaked and a shorter recession than expected is possible. 

In a few days, the Bank of England’s Monetary Policy Committee (MPC) will meet for the first time in 2023. After the last meeting in December 2022, January followed with a break. Thursday could mark the tenth consecutive meeting in which the committee votes to increase the standard base interest rate. The base rate had remained mostly steady throughout the peak of the pandemic until inflation began to grow and in December 2021 the almost zero all-time historic low rate of 0.1% was increased to 0.25%. 

Homeowners have shown demand for remortgages in the effort to save money in the midst of rising interest rates causing higher repayments. Without a remortgage at the end of a mortgage term, a homeowner is moved to their lender’s standard variable rate (SVR). The risky SVR could not only be connected to a higher interest rate than what is found with a remortgage, but it is subject to further rate hikes. A fixed rate remortgage choice could have a better interest rate and shield from any further interest rate increases ahead. 

For a homeowner trying to build a strategy to survive and perhaps even thrive in the year ahead, researching forecasts and tidbits of knowledge can go a long way in planning. Unfortunately, trying to wade through the negativity and discover something that is helpful is difficult. The current forecasts include higher interest rates to come, continued financial impact from inflation, higher energy costs, a possible recession, falling property values, and more. It can be overwhelming to try and find words of wisdom to follow in the hopes of weathering through the difficulties experts have told to expect.