The Bank of England’s Monetary Policy Committee (MPC) voted during their November meeting to raise the standard base interest rate from 2.25% to 3.00% with a 0.75% hike. The increase is the largest since 1989 and was the eighth consecutive rate rise so far in an effort to control inflation. Along with the rate hike came a warning from the Bank that the next two years could be quite difficult for the economy.

The latest data from the Bank of England on the UK housing market reveals caution as consumers are starting to borrow less with rising inflation and rising interest rates. In September, mortgage approvals reached 66,800, which was down from the 74,400 reported in August. The borrowing value remained relatively steady at £6.1bn. Experts point out that the slowdown in the market occurred before the mini-budget announcement on 23 September, meaning economic responses were not likely influencing buyers.

The Bank of England’s Monetary Policy Committee (MPC) will be meeting this Thursday after having not met since September. The meeting had been due to follow the budget announcement today which would have either put more or less pressure on the MPC to respond to inflation. When the mini budget was announced earlier in October, forecasts shifted from the MPC hiking the rate by 0.50% to a possible 1.0%. The budget has now been delayed until 17 November by the new Prime Minister Rishi Sunak. Currently most polls show economists planning for the meeting to result in a 0.75% increase that would shift the Bank’s standard base interest rate to 3.0%.

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.