House prices and interest rates – what could the future hold?
3 May 2022

The cost of living increases, especially energy, prompted by the economic costs of two years of Covid-19 are also being accompanied by interest rate increases, while would-be home buyers watch asking prices for property continue to increase.

To all intents this is a perfect storm for consumers, but likely first-time home buyers and those wishing to trade up are going to find it harder to make the transition. According to the Nationwide, a typical property now costs a record £29,162 more than it did a year ago, which represents the largest cash increase since the Society started collating property data in 1991.1

The rise, which equates to a 12.6% increase across the housing market, is continuing to surprise industry experts. It would be expected that with pressure on household budgets along with rising inflation, the housing market would have quietened down, but in reality, property values are being driven by an imbalance between the meagre size of property supply being outstripped by the demand from prospective buyers, which is still as positive as it was last year.2

How long it can continue is still a matter of conjecture.  As household cost increases begin to bite, demand is likely to subside. The other factor is the rise of interest rates. After the rise in inflation, the Bank of England has had to raise the bank base rate, which of course has had a knock-on effect on the availability of continuing low mortgage rates2.

According to Moneyfacts, standard variable rate mortgages have seen the largest single monthly rise since they began recording statistics. Opting for a fixed rate mortgage is becoming a real alternative to keep costs under control, but even fixed rates are also showing rate increases too, with 2-year fixed rate deals showing their largest increase since 2015.3

At the same time, product choice is shrinking with lenders revising and condensing their product ranges. While there are still over 4,800 products on the market, a monthly fall of 518, if continued, would represent a significant reduction in choice.4

For those readers who are still on their lenders’ standard variable rate or are coming to the end of their fixed rate period, now is a good time to seek professional mortgage advice and let us talk you through the options available to suit your circumstances.


1 – BBC (2022) House prices see record cash rise, says Nationwide. Available at: (Accessed 29th March 2022)

2 – Bayliss, J (2022) RICS Residential Market Survey. Available at: (Accessed 29th March 2022)

3 – Williams, E (2022) Moneyfacts: SVR Mortgage Rates Post Biggest Ever Monthly Rise. Available at: (Accessed 29th March 2022)

4 – Financial Conduct Authority (2022) Mortgage Lending Statistics 2022. Available at: (Accessed 29th March 2022)

Practical tips to help reduce your monthly outgoings

 With rising prices from food and petrol to domestic electricity and gas bills, what can we do to help ourselves and budget in a way that ensures we can live within our means without racking up overdrafts and other debts?

The golden rule is to make sure that if you are finding difficulty paying for a service, don’t hide away. Call the people to whom you owe money to see if you can come to a temporary agreement.

Whilst we can’t control the events surrounding the economic bumps in the road, we can take positive action to cut our household costs by looking at the services and goods we can afford to do without.

The question to ask yourself when you look at your bills is ‘Do I really need this?’ and ‘Is this value for money, for me?’

Subscriptions – Netflix, Amazon, Now TV and Sky are a few of the TV subscription channels that require regular monthly payments, with Sky packages starting at anything between £26 and £46 depending on what services are required. Have a think, do you really value this?

Credit card/store card balances – If you are just making minimum monthly payments on outstanding balances, consider reducing your balance, if possible, to reduce monthly outgoings. Consider talking to your financial adviser about any debt consolidation options that could be suitable for your circumstances.

Home phone, broadband and mobile phone –

  • Call your suppliers and ask for a better price – you’ve got nothing to lose
  • Look at price comparison websites to see if you can find cheaper deals – though be careful to check you aren’t eligible for any financial penalties if you do make a change.

Water bills –

  • Monitor your consumption with a water meter
  • Take steps to reduce usage, such as switching to showers instead of baths
  • Check your shower is fitted with an efficient shower head to help save water

Gas & Electricity –

  • Low income families can benefit from a £140 discount in the Warm Home Discount
  • In February 2022 the government announced extra help towards rising bills, including a £150 Council Tax rebate for eligible households and £200 towards energy bills in England, Scotland and Wales.1
  • Thinking of changing suppliers? Unfortunately there are no savings to be had here at the moment – each energy supplier charging to the limit of the energy price cap, and if you are on a fixed tariff coming to an end then you will be placed on your supplier’s standard variable tariff.

Council Tax – are you paying too much? Up to 400,000 homes are in the wrong Council Tax band according to MoneySavingExpert2, so it is worth checking.

Go to the Money Helper guide at

MoneyHelper is provided by the Money & Pensions Service – set up by HM Government.


1 – (2022) Households urged to get ready for £150 council tax rebate. Available at: (Accessed 29th March 2022)

2 – Lewis, M (2022) Council Tax Bands. Lower your band and save £1,000s. Available at: (Accessed 29th March 2022)

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