The Bank of England has released the latest information on the housing market and the data reveals a 17-month high in mortgage approvals. Net mortgage approvals for house purchases increased in February to 60,400 from 56,100 recorded in January. The increase exceeded the expectation for growth to 56,500, which was the highest forecast since September 2022 when the Bank of England’s standard base interest rate was at 2.25%. 

The housing market slowed in March, and many factors came together to convince homeowners to sit on the sideline and wait. Of course, there were likely many hopeful home buyers shut out of the market due to affordability. According to Nationwide, the average house price declined by 0.2% from February into March. It is the first time a decline has been recorded in three months. The previous two months experienced a 0.7% increase, and with the recent 0.2% decline, the average house price is £261,142.

Homeowners are being encouraged to shop for a remortgage when they are nearing the end of their mortgage term. If they want to not pay more than necessary, then avoiding their lender’s standard variable rate (SVR) is the best strategy. Without remortgaging, they will be at the mercy of a risky SVR which is normally a higher rate and has been known to be double or more the interest rate that could be found with a remortgage. Also, it is a variable rate which could fluctuate whereas with a remortgage the homeowner could choose a fixed rate and lock in their chosen rate and have the same monthly repayments. Unfortunately, there are homeowners that simply don’t know a remortgage is an option or they believe the remortgage is going to make them take on more debt rather than offer them savings and peace of mind.

There are many homeowners coming to the end of their mortgage term this year. There are a sizable number of those ending that are two-year fixed rate deals obtained in 2022 when the Bank of England’s standard base interest rate was coming off of an historically low base rate of 0.1%. By March 2022, the Monetary Policy Committee (MPC) had increased the base rate for three of what would become fourteen consecutive meetings of rate hikes. Two years ago, this month the base rate was only 0.75% and lenders were offering cheap mortgage and remortgage deals.

The latest information on the housing market from the Office of National Statistics (ONS) reveals that becoming a homeowner is unsurprisingly very difficult. The average earnings have doubled since 1997, but the average house price has increased by 4.5 times. Homes in England and Wales have not been affordable for hopeful home buyers in over two decades. The last time homes were considered affordable when comparing the ratio of earnings to the average house price was 2002.

On Thursday, the Bank of England’s Monetary Policy Committee (MPC) met and the majority of the members voted to hold the current standard base interest rate steady at 5.25%. It marks the fifth consecutive meeting of holding the rate. It did not surprise economists nor other experts for there were few expecting a rate cut even if inflation declined, which it did. Inflation had declined to 3.9% in November but increased to 4.0% in December and January. The latest report on inflation for the twelve months to February revealed it had declined to 3.4%. No longer sitting at double the target rate of 2.0%, it signals the peak base rate was reached at 5.25%, and the MPC will likely begin voting for a cut in the first half of the year.