The forecast for the UK housing market is for a cooling down from the past few years of tremendous growth. During the pandemic and the race for space buying frenzy that resulted, home buyers showed such a strong demand that records were broken month after month. Hopeful home buyers remained despite the higher asking prices due to historic low interest rates. For much of the previous two years, the Bank of England’s standard base interest rate had been at almost zero at 0.1% making borrowing more affordable than it had been in generations.

In the next year, almost two million households with fixed rate deals will come to the end of their mortgage terms. According to UK Finance, 1.8 million fixed rate deals are due to expire in 2023. The homeowners will then be able to choose from a remortgage or if not, be moved to their lender’s standard variable rate (SVR). A SVR is typically attached to a rate higher than what is offered with a remortgage, and it is subject to increases when rates are rising. Rather than face a higher rate or further hikes, a fixed rate remortgage could offer relief.

Experts have been spreading the word for many months now of the benefits available to homeowners should they choose to remortgage. This is especially true for those that choose a fixed rate remortgage. Doing so locks in the interest rate and shields the homeowner from further interest rate hikes. It also protects homeowners from the riskier and often more costly standard variable rate (SVR) they will face at the end of their mortgage term if they skip a remortgage.

During the pandemic, the rural countryside offered everything one would need or want to escape the confining surroundings of lockdowns. There was such a demand for more area both inside and outside the home that it became known as the Race for Space. Home buyers were searching for more space indoors to offer room to work from home privately, for children to study, for the family to enjoy entertainment, and for keeping fit while being banned from local gyms. Now that remote working is coming to an end, lockdowns seem to be in our past as the amenities of city life are once again in demand.

Homeowners are being warned to expect a decline in property values next year. This could be an issue for new and fairly new homeowners. As values decline, some could find themselves in negative equity. This occurs when a homeowner’s property value falls below the level of debt on the property. It could easily happen as many in the past few years could have bought their home when house prices were at record highs. 

Homeowners are facing higher repayments as the Bank of England’s Monetary Policy Committee (MPC) voted on Thursday to raise the standard base interest rate another 0.5%. In the start of December 2021, the base rate was at almost zero having remained steady for the entire year at 0.1%. Inflation growth pushed the MPC to raise the rate for the first time since the pandemic had taken hold and lockdowns began. The first increase raised the rate to 0.25% and further rate hikes during the last nine consecutive MPC meetings this year will close out the rate at 3.5%.