The current economy is shifting the housing market and due to higher interest rates along with high pricing a slow down is likely to occur. There could be a shock wave to the market as first-time buyers are shut out of the market and homeowners are pressured to stay put rather than upgrade or downgrade due to pricing and interest rates. Rather than a slow and steady correction to the market following the pandemic induced race for space in the market, it could be a faster cool off or even a freeze.

Homeowners are being encouraged to shop for a remortgage to discover what opportunities are available. There could be savings and other benefits to be found at a time when adding to the household budget could be very helpful. If not prepared, homeowners could be in for financial shock when faced with higher interest rates that they are not accustomed to and haven’t faced in over a decade.

The demand for a remortgage has risen and it is all due to the strategy of securing a safety net in a shaky economy. Inflation is growing at a rapid rate which has not been seen in four decades. Interest rates are rising, and energy costs are breaking budgets. This all comes on the heels of a global pandemic that still is lurking and could cause issues when summer is over and the outdoors is less accessible to gatherings, dining, entertainment, working and studying. Household budgets need some relief and for homeowners that relief could come in a remortgage.

The average house price has increased by a little over 24% since the start of the pandemic. Demand grew when lockdowns began and the need to fit into a new pandemic lifestyle started which included the need to work, study, get fit, cook, and entertain at home became mandatory. The race for space, as it was called, pushed demand in the housing market at a time when interest rates were at an all-time over 300 plus years historic low. 

The Bank of England’s Monetary Policy Committee (MPC) has been taking action to slow fast rising inflation in the UK. During each of the last five consecutive MPC meetings the standard base interest rate has seen an increase. The first began last December when the rate was increased from the long standing over 300 years historic low of 0.1%. As of the June meeting, the rate had been lifted to 1.25%. There was not a meeting in July, and the next is scheduled for August. The Banks’s Governor has warned the next increase could be higher than the 0.25% increases seen this year at a possible 0.50% which would be the largest hike since 1995.

The UK average house price has increased again and this comes as interest rates are higher than buyers have faced in over a decade. According to Rightmove, an online property lister, the average price of the housing market is £369,968, which is up 9.3% in the past twelve months. The price is a bit higher than recorded in May of 0.3%, but below April’s data of 2.1%.