The UK housing market is forecast to see a decline next year due to higher interest rates, inflation, and continued low supply of available properties for sale. The decline could be the deepest in more than a decade. Home buyers are expected to exit the market as affordability becomes an obstacle and mortgage lending could reach a low not seen since 2011. Though while mortgage lending could slow, remortgage lending will likely continue to grow.

The Bank of England’s Monetary Policy Committee (MPC) will be conducting a regular scheduled meeting on 3 November. It could be the eighth consecutive meeting in which there is a majority vote to increase the standard base interest rate. Currently the base rate is at 2.25% after the last increase of 0.50% that occurred from the September meeting. There is an expectation that the next increase voted by the MPC could take the base rate to 3.0% or more.

There are experts calling for new affordability rules for homeowners seeking to remortgage. The changes called for vary, but the focus is to keep homeowners from struggling to make their repayments. Due to inflation levels not seen in decades and higher interest rates, household budgets are strained. It is not only in the best interest of homeowners to pay their repayments and remain in their homes, but it is in the best interest of our economy and our country that there is not a wave of homeowners ejected from their homes due to their inability to pay.

In a statement that brought some confidence back to the financial market and perhaps the housing market as well, the Bank of England’s deputy governor, Ben Broadbent, doubted the base rate would require a rise above 5%. There have been forecasts of the Bank of England’s Monetary Policy Committee (MPC) increasing the rate in the coming months to at least 5.25% or more. However, the damage to households at that level would be significant while dealing with inflation.

According to the most recent report from Rightmove, the housing market proved resilient for another month with slight growth of 0.9%. However, there are specific signs that first time buyers are exiting the market as interest rates are rising and expected to rise more. The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate during the last seven consecutive meetings and are forecasted to do the same at the next meeting in November. The rate hike in November could also be the largest increase seen yet this year.

Warnings of a slowdown to the UK housing market could make for a double hit financially to household budgets. Not only are homeowners facing higher interest rates, but they could also see a loss in property values. Losing value in one’s home could cause the homeowner to dip into negative equity in the worse scenario, and if not in negative equity it could still result in the homeowner not being able to qualify for the best remortgage offers which otherwise could have offered substantial savings.