Perhaps there has been no better time to shop for a remortgage this month. The current week and last has seen lenders bringing new remortgage products on the market for homeowners to choose from with some offerings involving attractive incentives. For instance, one lender is not only offering a competitive interest rate, but also cash back of £1,000 to the borrower. Lenders are anticipating a higher demand for remortgages as the Bank of England’s Monetary Policy Committee (MPC) meets on 2 February to likely increase the standard base interest rate. It is expected that homeowners yet to obtain a remortgage will feel the pressure of higher rates and seek to find relief for their budgets.

The weeks have passed bringing the next Bank of England’s Monetary Policy Committee (MPC) closer to commencing. There was not a meeting scheduled in January, allowing borrowers to prepare between the December 2002 meeting and the next one on 2 February. The last nine consecutive meetings since December 2021 have resulted in a rate hike in response to growing inflation. The current rate is 3.5% after the last increase of 0.50%.

The Office for National Statistics (ONS) released their November data and with it the first monthly decline of the average house price in a year. The average house price declined by 0.3% between October and November. It also brought decline in the annual house price growth rate to 10.3%, down from the recorded 12.4% in October. Lower than the October record high of £296,000, the November average house rate of £295,000 reported by the ONS is still much higher than the average that existed prior to the pandemic.

Homeowners in December were facing the holiday distractions and likely trying to cypher through the information on what to expect from the coming year. Fewer sought out remortgaging, but fewer home buyers were in the market as well. According to a statement by LMS CEO Nick Chadbourne, “Mortgage activity slowed in December as borrowers expect rates to drop in the new year.” 

With rising interest rates and growing inflation making saving money for a deposit difficult, the housing market has lost the attention of hopeful home buyers. Home sellers have dropped their asking prices to find buyers, and according to Rightmove the average asking price in January is £8,720 less than the peak asking price of October. However, the average asking price increased by £3,301 In January after declining in the two months prior.

The relaxed, opportunistic, no fear home buying and ownership of the past years has faded with the new economic environment. Now warnings abound of financial hardships in the coming months for hundreds of thousands of homeowners. This is especially true for newer homeowners that have yet to have their first mortgage term end. Not only could they be facing affordability issues, but they could also become a prisoner to their mortgage.