There are many homeowners that will find themselves unable to remortgage for a reason beyond tight lending practices if trends in the housing market continue.  Recently forecasts were issued that house prices will be declining for the next five years.  This could cause over a million homeowners to face negative equity and the inability to obtain a remortgage to gain protection from higher interest prices. 

According to data from Halifax, since 2007 the fall in house prices has caused a loss of £39,000 from the average property.  Of course this is an average, which is balanced out by price increases in the London area.  Some areas of the UK have seen their house prices decline by more than 10 per cent since last year, and for others even more. This decline in house prices is wiping built equity away from homeowners.

Negative equity is a real threat for many homeowners.  As house prices decline, home values do as well in the areas.  Homeowners will find they owe more on their mortgage loans than their property is worth.  The only way to stay above what is called “underwater” in a mortgage is to pay down the debt below the property value or to increase the value of the property through renovations or improvements.  Trying to stay above negative equity is why many homeowners have been paying on debt versus borrowing. 

A homeowner seeking a remortgage would be looking for lower interest rates to bring mortgage payments lower.  By then paying more on the mortgage payments one could bring debt down.  Many mortgages can have associated fees that prevent overpayments, so a remortgage that does not have such fees would be helpful.  There are many homeowners working on lowering the debt of their mortgage to secure a better rate through a remortgage.  For those that find themselves in areas with falling housing prices, the consideration of a remortgage with a good rate as well as the ability to make overpayments would be a smart choice.