Experts Divided on House Prices but Not on Interest Rate Hikes

Experts Divided on House Prices but Not on Interest Rate Hikes

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.

Inflation is expected to increase to 11.0% this year. Even the 11.0% forecast is an increase over what had been an estimate of 10.0%. Inflation in basic terms is the cost of living and that means it is taking more money out of pocket of households than this time last year by a big jump and the worst is still yet to come according to some experts.

To control inflation, the Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate during each of the last five consecutive meetings. There was not a meeting in July and the next is in August. There is a possibility that the MPC could hike the rate higher than the ones seen this year which were all at 0.25%. Some members would have liked for the rate to increase by 0.50%, so there is always the possibility that the current rate of 1.25% could increase to 1.50% or 1.75% at the next MPC meeting.

While the expectation of the housing market over the next few months may be divided, few would expect for the MPC to conduct their next meeting and leave the rate steady. Not only is an increase likely next month, but it is probably not the last for this year.

Homeowners are being encouraged to shop for a remortgage to help curb the impact of inflation as well as rising interest rates. Paying more than necessary on repayments when saving is so important is one reason to shop. 

The current Bank rate is the highest in over a decade, and with a large number of homeowners expected to have their mortgage term end in the coming months, remortgaging is an opportunity not to be pushed aside. It is why some homeowners are choosing to endure penalty fees to end their mortgage term early to remortgage now rather than later when rate choices could be even higher. 

Remortgage shopping online is quick and simple. Visiting a remortgage lender’s website could offer a quote in hand to review in a matter of minutes. A remortgage broker website could put several quotes in hand from various lenders in which to compare. The broker site could also possibly have special offers that the lenders do not offer directly. 

Due to the ease in remortgage shopping online, it is encouraged that all homeowners do so and perhaps discover an opportunity to help their financial situation and maybe a safety net against rising rates should they choose a fixed rate remortgage, as many homeowners have done.

The next meeting of the MPC is only weeks away on 4 August and will include a report on inflation.

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