Inflation remains stubbornly high suggesting the Bank of England will increase interest rates further.

The rate at which the cost of goods and services are rising – as measured by the Consumer Prices Index – fell slightly in March, dropping from 10.4% to 10.1%.

But the fall was lower than economists had been expecting, with inflation still more than five times higher than the Bank’s 2% target.

As a result, commentators are predicting the Bank’s Monetary Policy Committee (MPC) will increase the Bank Rate again when it meets in May, and possibly make further hikes later in the year, dashing hopes that interest rates had already peaked.

But despite rising interest rates, mortgage rates are continuing to fall, with best buy deals currently available with rates of less than 4%.

Inflation has remained stubbornly high, despite the MPC increasing the official cost of borrowing from 0.1% in December to 4.25% now.

The high level of inflation is being driven by a number of factors including the conflict in Ukraine, which has pushed food and energy prices higher, the resumption of normal life after Covid and issues relating to the weather.

A very hot summer in Asia and cold winter in Europe in 2022 increased the demand for electricity to power air con and heating, at a time when suppliers were hit by the invasion of Ukraine, which pushed fuel prices higher.

Adverse weather has also impacted food production, with hot weather across Europe affecting salad and soft fruit crops, while droughts in Argentina have affecting soybean harvests, further driving up food prices.

(Soybeans are used to make soybean oil, the main substitute for sunflower oil, which is in short supply due to the war in the Ukraine.)

However, economists are still expecting inflation to start falling quickly in the second half of the year.

In particular, they are predicting steep price falls in gas and electricity prices, which is good news for consumers.

Once inflation gets closer to its 2% target, the MPC can then consider cutting the Bank Rate to help support the economy.

While the prospect of another rise in interest rates may be alarming if you need to remortgage, you shouldn’t panic.

Mortgage rates have actually been moving in the opposite direction to interest rates for some time now, with the average cost of a five-year fixed rate mortgage falling by 0.23% since October, despite the Bank Rate increasing by 2% during the same period.

If you need to remortgage, you will have to decide whether or not to opt for a fixed rate deal or a tracker product.

Under a fixed rate mortgage, the amount of interest you pay will stay the same for the duration of your product term, typically two or five years, giving you the security that your monthly repayments will not increase.

If you take out a tracker deal, your interest rate will move up and down in line with changes to the Bank Rate.

Average tracker rates are currently 0.48% lower than the average two-year fixed rate mortgage, but this could change if the MPC increases interest rates again, as any rise would be passed on to you.

That said, if inflation does start to fall and interest rates are cut, you would benefit from the reduction if you are on a tracker mortgage.

If you opt for a fixed rate mortgage, you will need to decide whether to fix for two years or five years.

Five-year deals are currently 0.32% cheaper than two-year ones, but remember that despite high inflation, interest rates are still likely to be close to peaking, so if you fix for five-years you will be locked into these higher rates for longer.

It is also important to remember that fixed rate mortgages typically have early redemption penalties, so if you take out a five-year deal, you need to be confident you will not need to end it early.

Whatever you decide to do, it is important to shop around. The average rate charged on a two-year fixed rate mortgage is currently 5.32%, but the most competitive rates on offer start at 3.99%, with some five-year fixed rate mortgages available for 3.92%.

If you are coming to the end of your mortgage term, you should start planning now.

Lenders will let you ‘book’ a rate up to six months before you need to remortgage.

The average standard variable rate – the rate you are automatically put on if you do not remortgage - is currently 7.12%, so you want to avoid that if possible.

Although mortgage rates are significantly higher than they were a year ago, the number of people falling behind with their monthly repayments remains low by historic standards.

Lenders are expecting to see an increase in the number of people struggling with their mortgage, but this is unlikely to lead to a big jump in homeowners who are forced to sell their property.

This is partly because banks are obliged by the regulator to work with customers to find a solution and can only repossess a home as a last resort.

At the same time, employment levels remain high. In fact, recent government data showed that the unemployment rate is currently just 3.8%.

As a result, there are unlikely to be a high level of forced sales, which is good news for the property market.

Instead, higher interest rates are likely to cause activity in the housing market to be more subdued than in recent years.

The number of people looking to buy a home fell sharply in the wake of the mini-Budget, which caused a steep rise in mortgage rates.

But there are already signs that demand is recovering, with buyer numbers reaching their highest level since October in March.

Property values are just 1% lower than they were in October, and while some ‘soft repricing’ is expected to continue, with sellers making modest downward adjustments to match what buyers are prepared to pay, there are not likely to be steep house price falls.

Meanwhile, the number of homes for sale has increased, offering more choice for potential buyers following years in which the market has been plagued by a shortage of stock.

Six out of 10 landlords are in favour of government plans to introduce new minimum standards for rented homes.

A third of landlords said they strongly supported the Decent Homes Standard for properties in the private rented sector, while 28% said they generally supported it, according to research by Paragon Bank.

Only 8% of landlords questioned said they were unaware of the change.

The government has pledged to introduce the Decent Homes Standard for the private rented sector as part of the Renters Reform Bill, which will be introduced during the current parliamentary session.

Not only do landlords support the move, but 74% also expressed frustration with the lack of action taken against rogue landlords, saying local authorities should do more to drive out those who let sub-standard homes.

Richard Rowntree, managing director of mortgages at Paragon Bank, said: “The vast majority of landlords have nothing to fear from a Decent Homes Standard as they are providing a good quality home to their tenants already.

“It’s the minority of landlords who don’t meet these standards that are tarnishing the wider reputation of the sector.”

Although the majority of renters live in homes that are safe, the government wants to do more to help the one in five people who live in a property that is considered to be unfit, more than half of which pose a risk to renters’ health and safety.

The proportion of homes that are classed as being non-decent has nearly halved during the past five-years, falling from 44% in 2018 to 23% in 2023, according to the latest English Housing Survey.

Even so, nearly 1 million properties in the private rented sector are still classed as being non-decent.

The Decent Homes Standard requires homes to be in a reasonable state of repair, have reasonably modern facilities and services, and provide a reasonable degree of thermal comfort.

If homes fall below this standard, renters can have their rent repaid.

The introduction of a Decent Homes Standard is great news for those who rent in the private sector, as it means they will no longer have to put up with sub-standard accommodation.

The move also brings the private rental sector in line with the social one, which has had a Decent Homes Standard since 2001.

The research suggests the majority of landlords are also in favour of the change.

In fact, a separate study conducted by Paragon Bank found that 81% of landlords in the private rented sector upgrade each new property they buy, with 18% spending between £10,000 and £20,000 on improvements and 22% spending more than £25,000.

Around 83% of landlords said they made the changes to ensure they were providing a decent home to their tenants, while 82% said they wanted to make the property more attractive to tenants and 66% hoped to increase the rent they could charge.

Alongside introducing the Decent Homes Standard, the Renters Reform Bill includes a number of measures to protect renters, including ending section 21 ‘no fault’ evictions.

Other changes include making it illegal for landlords to have blanket bans on families with children or people receiving benefits, and it will also be easier for renters to have pets.

Arbitrary rent review clauses will be outlawed, and notice periods for rent increases will be doubled. Renters will also have stronger powers to challenge rent rises if they think they are unjustified.

The introduction of the bill will also see all renters moved into a single system of ‘periodic tenancies’, enabling them to leave poor quality housing without remaining liable for the rent, and making it easier for people to move if their circumstances change.

The government claims the changes are the biggest shake up for the private rented sector for 30 years.

The government is proposing new rules for holiday lets to protect local communities in tourist hotspots.

Under the news rules, which are currently out for consultation, homeowners in England would be required to get planning permission before renting out their property as a short-term let.

The move aims to help prevent local people from being priced out of the property market in areas that are popular holiday destinations.

Michael Gove, Secretary of State for Levelling Up Housing and Communities, said: “Tourism brings many benefits to our economy but in too many communities we have seen local people pushed out of cherished towns, cities and villages by huge numbers of short-term lets.

“I’m determined that we ensure that more people have access to local homes at affordable prices, and that we prioritise families desperate to rent or buy a home of their own close to where they work.”

The popularity of short-term lets has soared in recent years due to a combination of online platforms, such as Airbnb, and a rise in people opting for staycations following the COVID-19 pandemic.

But while the jump in availability of holiday properties is good for tourists, local people in some tourist hotspots have found themselves priced out of the property market.

There have also been complaints that popular destinations have become ghost towns outside of the holiday season, while they also face labour shortages due to the lack of affordable local accommodation to rent or buy.

The move is potentially good news for people who live in tourist hotspots who are struggling to get on to the property ladder, as it should help to ensure that house price rises are more sustainable.

It is less good for people who had hoped to invest in a holiday let in a popular area, particularly if they are considering this as an alternative to a buy-to-let property, after these have been hit by significant tax rises in recent years.

But the move should not impact homeowners in holiday areas who want to rent out their home on an occasional basis, such as while they go away themselves.

The consultation is looking at whether homeowners should have the flexibility to rent out their home for a set number of nights, such as 30, 60 or 90 nights each year without needing to obtain planning permission.

The changes will only impact short-term lets, and will not affect hotels, hostels or B&Bs.

The proposals come as the Department for Culture, Media and Sport launches a separate consultation on a new registration scheme for short-term lets.

The scheme aims to build a picture of how many short-term lets there are across the country and where they are located, to try to understand what impact short-term lets have on local communities.

Culture Secretary Lucy Frazer explained that while the government understood the benefits for tourists that flexible short-term lets offered, these should not come at the expense of local people who wanted to buy their own home.

It hopes that through gathering data on the situation, it will be able to help get the balance right and address some of the concerns of local communities.

House prices are still up 4% year on year and we’re expecting 500,000 home sales to go through in the first half of 2023.

The number of sales agreed is 11% higher than the number agreed in spring 2019 - and sales are on an upward trajectory.

Prices are down 1% from what they were in October 2022, but the housing market is faring much better than many predicted and the number of sales going through is starting to pick up.

There are now 65% more homes available for sale than there were this time last year. The average estate agent now has 25 homes available, compared to a low of 14 homes in spring 2022.

This means there’s much more choice for buyers  - and we’re expecting at least a million home sales to go through in 2023.

Buyers with less spending power are looking for homes that offer more bang for their buck.

That means homes in the more affordable areas like Scotland, Wales, the North East of England and London are seeing plenty of demand.

And we’re expecting the popularity of inner London flats to see a resurgence this year - because of price stagnation since 2016 - they’re now representing good value for money.

Across all regions and countries of the UK, we’re seeing a 5% increase in the share of sales at the lower end of the market and a 4% decrease at the top end, clearly showing that buyers are currently more interested in homes at the more affordable end of the spectrum.

The top end of the London market is the only area bucking this national trend, with an increase in the share of sales in the top 20%.

If you live in an area that saw big gains during the pandemic (we’re talking the South West, South East and Midlands) then you may find it takes longer to sell, as these homes now need bigger mortgages from would-be buyers.

And 4% mortgage rates are currently reducing buying power by 20%, hence buyers are looking for cheaper properties.

Sellers are making modest downward adjustments to their asking prices to ensure their pricing matches what buyers are prepared to pay.

The average seller discount at the moment is 4% or £14,000.

That said, the scale of price gains over the pandemic (where the average home value increased by £42,000) is giving sellers room for manoeuvre to make these adjustments so that they can continue with their moving plans.

The average home is now taking 15 days longer to sell than in spring 2022, when we were in a red hot housing market.

However, homes in most areas are still selling faster right now than they did in spring 2019.

Scotland has the shortest sales period at 28 days (where homes are marketed with a survey and valuation in place), and London has the longest time to sell at 44 days.

Hybrid working between the home and office is becoming the norm for many office workers.

And that freedom is still opening up the buying landscape for many, allowing them to look further afield for a home that’s better value for money.

A spike in retirement caused by the pandemic is also continuing to be a trigger for home moves.

Meanwhile, increasingly high rents are pushing some renters to become first-time buyers.

And finally, cost-of-living pressures will encourage some movers to down-trade from larger homes that are expensive to run to more affordable properties.

The market is going through a soft repricing process with modest quarter-on-quarter price falls across all regions and countries of the UK.

But the good news is that buyers and sellers are continuing to agree deals and there’s little evidence to suggest house prices and transaction volumes are going to suddenly drop lower.

The most affordable markets will continue to attract demand and see above-average levels of sales.

The onus on all sellers is to make sure pricing aligns with buyers' expectations. If you are serious about moving, you simply cannot afford to over-price your home.

Mortgage rates are set to remain around 4% over much of 2023 and could move lower towards the end of the year.