Despite rising interest rates, or perhaps because of them, borrowing is currently popular. The standard base interest rate set by the Bank of England’s Monetary Policy Committee (MPC) has increased at each of the last six consecutive meetings which started last December. The then rate was at an all-time low of 0.1% which was certainly the motivation behind most of the borrowing done in 2021. The rate had been dropped to an over 300 plus years low due to the economic impact of the global pandemic.

UK’s largest lender, Halifax, has issued a report showing house prices declined for the first time this year in July. The decline fell by 0.1% from June to July. The last decline in house prices was reported last year in June. Some experts believe that the decline could be the usual summer dip as home buyers put their attention elsewhere. However, it is difficult to overlook that it could be the start of further declines in the market as affordability becomes an issue due to higher interest rates and the impact of inflation.

UK house prices have declined for the first time this year as buyers begin to exit the housing market. Interest rates as well as other economic factors such as inflation have had a negative impact on budgets. Confidence in the economy has also declined making some buyers take a backseat rather than move ahead with a purchase. However, Rightmove puts blame on summer distractions rather than the current economic conditions for the decline of house prices.

The demand for remortgaging has grown due to rising interest rates and the impact from inflation. To assist household budgets homeowners are seeking to end their mortgage term early to allow them to remortgage. Rather than wait until their mortgage term ends and possibly face higher interest rates, taking on a penalty fee and ending the term now allows them to choose from today’s remortgage offers. 

The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate at each of the last six consecutive meetings. The first increase was in December 2021, when the historically low 0.1% rate was hiked a bit unexpectedly followed by five more increases. It had been forecasted that the first increase would occur in early 2022, but inflation grew rapidly and the MPC moved quickly to try to control it. This month, the sixth increase, the rate grew to 1.75% which is the highest in 14 years.

The UK housing market could be experiencing the cooling down experts predicted when the Bank of England’s Monetary Policy Committee (MPC) first began increasing the standard base rate. Since December last year, the MPC has met six times and during each meeting the rate has been hiked. It now sits at 1.75% after a 0.5% increase last week, the largest increase in 27 years. Due to the increase in interest rate offers with mortgages, home buyers could be turning their attention away from the market, but just as many could be having issues with affordability.