In the span of a few days, reports and opinions of experts offered conflicting accounts of what was expected of the UK housing market. Some report the housing market will be resilient and house prices will rise even into next year. Other reports forecast a slowdown of the market and in some cases a rapid slowdown. The reports may give conflicting expectations, but as to the expectation of rising interest rates, most if not all forecast hikes of the standard base interest rate by the Bank of England.

Homeowners are likely to experience shock when it comes time to remortgage. When their mortgage term ends, there is the choice to remortgage or allow their lender to move their loan to the lender’s standard variable rate or SVR. The SVR is considered a risky choice for households that do not have budgets capable of handling frequent changes to the interest rate. This is especially so when interest rates are being increased such as has already happened four times this year already. The shock will come when the homeowner reviews current interest rate offers. 

Inflation is a hot topic these days. It should be as it has the potential to make drastic financial impacts on the UK economy, businesses, and households. Homeowners are being warned to keep an eye on their mortgage due to inflation, and many are unware of exactly why that is so. The main reason is because as inflation grows, so likely will interest rates and that could mean a homeowner’s property loan is going to be more expensive.

The UK housing market has set another record. June data from Halifax revealed the fastest annual rise in 18 years. Prices rose 13% in comparison to May, which had been the largest monthly increase since 2004. The boost in the market, rather than the expected slowdown, is thought to be partly based on hopeful homeowners seeking to buy before the interest rates rise further.

The UK is expected to reach an inflation rate level of 11.0%. The Bank of England has told banks to keep more money available for buffering against the economic issues ahead and this will mean a tightening of lending with stricter affordability tests. Energy and fuel prices are expected to continue climbing. The information contained in the Bank’s recent Financial Stability Report.

Homeowners are taking advantage of the opportunities brought by remortgaging. The demand has risen for remortgages and was triggered by the many interest rate hikes made by the Bank of England’s Monetary Policy Committee (MPC). The rate had stood throughout 2021 at 0.1% until December when the first of five consecutive MPC meetings resulted in a hike to the standard base rate.