Home buyers were still showing interest in the UK housing market in August according to a recent report from Nationwide. The August data revealed a 0.8% increase over July. The increase was far more than the slight growth of 0.1% forecasted by some economists. It should be noted that the annual comparison of 12 months to July resulted in a 10.1% increase which was a 40 year high. There could be even other record highs due to increasing house prices once further data reports are released in the next months.

According to UK Finance, there are approximately 430,000 homeowners on two-year fixed interest rate deals that will expire by the end of 2022. They would have chosen their interest rates when the Bank of England’s standard base rate was at an all-time historic 300 plus years low of 0.1%. The current rate is now 1.75%, which means their cost of borrowing is going to be much more expensive. 

In the last few days, the news concerning the grim forecasts for winter and the cost of heating have piled on one after another. Headlines sharing information as to nearly 25% of UK households are intending to not turn on their heat this winter to save money. Another headline spoke of possible homelessness due to the cost of heating and the inability for households to afford not only food, and heating, but even fuel for transportation to work. Due to the many factors impacting the economy and household budgets, experts are once again encouraging strongly for homeowners to shop for a remortgage for possible assistance.

In the coming months, millions of UK homeowners are going to be facing a tough financial situation when their mortgage term ends. Many are due to have their mortgage term end within the next six months. If they choose to remortgage, they will have much higher interest rates offered than before, but should they choose not to remortgage the interest rates they will face when they are moved to their lender’s standard variable rate (SVR) could cause a financial strain they are not expecting. It is often reported that the average SVR could be twice or more the interest rate level connected to a remortgage.

The current Bank of England’s standard base interest rate is 1.75% after having been increased by 0.50% at this month’s Monetary Policy Committee (MPC) meeting. This time last year, the base rate was at an all-time historic low of 0.1%. In comparison to last year, the rate looks much different and it feels much different to household budgets. The latest report on expectations of the need for the MPC to hike the rate further has a forecast of the rate rising to over 4% in the first half of next year. This should serve as a wake-up call to all homeowners that could but have not yet remortgaged.

In yet another reason for homeowners to seek a remortgage to possibly give relief to their household budget, the UIK is now forecasted to hit an inflation level of 18% in early 2023. This forecast comes from the US financial group Citi. The Bank of England has forecasted inflation to reach 15% early next year. Perhaps it matters not the level of inflation, but the fact that it is forecasted to keep rising. The impact could serve a greater hit on households due to the already expected higher cost of energy this winter.