The UK housing market is seeing a boost in demand from home buyers. One reason is due to the lower mortgage rates being offered by lenders. Another is there is a greater supply of listed properties currently on the market. According to Halifax, the average UK house price reached a two-year high in August. The 0.3% increase last month followed a 0.9% increase in July. The August average house price reported from Halifax is £292,505. The annual increase is 4.3%, which is a reflection of the lower demand in the market last year due to higher mortgage interest rates.

The higher house prices are likely to begin shutting out buyers, especially first-time buyers. This is a worry as it was only recently first-time buyers became a stronger demographic in the market. This could mean the demand now might be the highest for the year.

When house prices increase, it can be quite helpful to homeowners. Obviously, if they are looking to become a seller, then higher house prices mean they could likely sell for a favorable amount. However, homeowners not looking to sell can benefit from higher house prices when they are looking to remortgage. 

At the end of a homeowner’s mortgage term, it is time to make a choice, and the choice could offer substantial savings. The expiration of a mortgage term offers the opportunity to remortgage. If the homeowner chooses not to remortgage, their lender will transition the loan debt to their standard variable rate (SVR). Experts encourage homeowners in need of a remortgage to avoid a SVR, as it could be double or more the interest rate that might be found with a remortgage.

When mortgaging or remortgaging, an indicator lenders use to determine risk of lending to a borrower is the loan to value or LTV. The higher the property’s value to the amount the lender is asked to lend is used to determine the offered interest rates. Taking a look at offered lender rates will quickly reveal the lower the LTV the better the interest rate offers. 

For home buyers, the LTV is helped by the amount of the deposit offered when buying a property. For homeowners, the LTV is impacted due to the amount of debt that has been paid off after the initial deposit when purchasing, and it is impacted if the property’s value increases or decreases. Ideally, the property value would increase, and this would help out the LTV ratio.

As the housing market attracts higher demand, there is a greater chance of property values increasing simply due to the growing number of home buyers interested in the market. Therefore, it could be quite helpful for a homeowner to remortgage when property values are higher or on the rise in comparison to when they could be on a decline.

Remortgaging interest rates have begun to catch up with the offers on mortgages. The lending market has become quite competitive as borrowers are responding to a more confident economic outlook. Inflation has reached target (2.0%), though it is slightly elevated at the moment (2.2%), it has by all intents and purposes been tamed from its double-digit level of October 2022 at 11.1% which was a 40 year high. Also, the Bank of England’s Monetary Policy Committee (MPC) made the first standard base rate cut since March 2020 in early August.

Due to the expectation that borrowers would turn to the lending market for more favorable rates, lenders began to cut their offers before the MPC made their decision to reduce the base rate from 5.25% to 5.0%. 

In the expectation of yet another rate cut this year, many lenders are below the base rate in their offerings, and some have reached 4.0% or below. 

For homeowners already moved to a SVR, those nearing the end of their mortgage term, and perhaps those not yet near their term’s expiration, but considering taking advantage of the current lower interest rates, shopping online for remortgage quotes is an easy and quick way to discover what opportunities in remortgaging are available. 

While homeowners no longer need to shop the housing market, knowing how the market is performing, the demand present and expected in the weeks and months to come, and how the market is doing locally to their area could offer insight as to when is the right time to remortgage. With lower interest rates already reflecting a second MPC cut this year, and house prices elevated and rising helping along property values, it might be the perfect combination to support a strategy of remortgaging sooner rather than later.