The housing market has reached another high. Yes, another record breaking high during pandemic recovery and the highest inflation rate in many decades. Home buyers were not deterred by higher interest rates, or they could have been motivated to buy before they rise higher. According to Nationwide, the average UK house price reached a new record high of £271,613.
Shopping for a remortgage, according to experts, should be at the top of a homeowner’s priority list if they have not remortgaged already. Not only are those that have had their mortgage term end encouraged to shop, but those close to their mortgage term ending and even those not so close are encouraged to remortgage shop. Rather than face possibly higher interest rate choices in the future, some homeowners are choosing to pay a penalty fee to remortgage early and have options of current interest rates.
The UK housing market already is showing signs of slowing down. Hopeful home buyers are likely becoming less enthusiastic about buying at least right now. Asking prices are still high, with higher interest rates borrowing is more expensive, there is still low supply of available properties on the market, and with inflation it is difficult to save for a deposit. Unfortunately, the desire to become a homeowner has been made more difficult in a short few months and it is expected to get worse.
The Bank of England’s Monetary Policy Committee (MPC) has voted to increase the standard base interest rate during the last five consecutive meetings. The last time, which was during the June meeting, there was a 0.25% increase. This brought the base rate to 1.25% which is the highest the rate has been since 2009. There were three members that would have liked the rate to have been moved to 1.50%.
The outlook on the housing market is very different than it was this time last year. The standard base rate of the Bank of England was at an all-time 300 plus year low of 0.1%. Home buyers were showing strong demand even though asking prices were breaking records month after month. Despite the higher asking prices associated with properties for sale, the cost of borrowing was so cheap it kept home buyers interested and motivated.
The UK house prices have month after month surprised experts. They did so during the pandemic and are still doing so despite high inflation and rising interest rates. However, despite house prices increasing to another record high in June, it is expected that buyers will begin to leave the market later in the year. Rightmove reported asking prices rose for the fifth consecutive month in June. The 0.3% increase put the average asking price at £368,614.