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.

The determination of UK home buyers can be seen in the latest house prices data which revealed that while the average house price increased last month, it was at the slowest growth rate since July 2020. Interest rates have caused mortgages to surge upward in cost. Repayments are taking up more of a home buyer’s income, and as homeowners many are facing possible negative equity and perhaps even worse as interest rates rise.

The Bank of England has warned that more interest rate hikes are to come to help take control of rising inflation. The warning is accompanied by more as it is suggested homeowners prepare to face mortgage distress as they face higher repayments. To secure a safety net against the rising rates, homeowners are encouraged to shop for a remortgage. Through choosing a fixed rate remortgage deal, a homeowner could lock in an interest rate and avoid the impact of further rate hikes.

Another warning has come that home buyers could be about to exit the UK housing market. According to a recent report, a mortgage is no longer less expensive than rent. Of course, there are other warnings as well such as higher inflation to come, higher interest rates, continued record high house prices, and a lack of supply in the market, but the ability to save money by taking on a mortgage rather than renting was a strong motivation