Another warning has come that home buyers could be about to exit the UK housing market. According to a recent report, a mortgage is no longer less expensive than rent. Of course, there are other warnings as well such as higher inflation to come, higher interest rates, continued record high house prices, and a lack of supply in the market, but the ability to save money by taking on a mortgage rather than renting was a strong motivation to buy. Such a warning should serve as a wake-up call to homeowners that have yet to remortgage.

Experts are strongly encouraging homeowners to shop for a remortgage soon. By doing so they could discover a deal and skip the higher interest rates that are attached to standard variable rates (SVR) and by choosing a fixed rate remortgage a homeowner could lock in a current interest rate rather than face higher ones later.

The Bank of England’s Monetary Policy Committee (MPC) in reaction to rising inflation rates has increased the standard base interest rate during the last seven consecutive meetings. The rate once stood at an all-time historic low of over 300 years at 0.1% in December 2021. It now stands at 2.25%, which is the highest rate in 14 years.

Homeowners that have likely remortgaged several times over the past years are now facing higher rates than ever before and first-time buyers coming to the end of their two-year mortgage chosen during the start of the pandemic are likely to face shocking changes in their repayments.

The average repayments have been reported to have almost doubled in a year. 

Homeowners should indeed take the advice of experts and shop for a remortgage. They also should be aware of the changes in opportunities if they wait. The rush to remortgage is certainly here, as each MPC meeting has increased the base rate and made borrowing more expensive. The next meeting in November will likely result in yet another increase. Each rate hike takes more money from a household that has not prepared early to face the rate increases.

The opportunity to remortgage and save money is so important that some homeowners are choosing to take on a penalty fee to end their mortgage term early to remortgage at current rates. Homeowners that did not remortgage at the end of their term and were moved to their lender’s SVR are likely paying much more than they would with a remortgage, so they certainly should consider remortgage shopping. Those close to having their mortgage term end should also shop. When interest rates are rising as often as they have this year and are due to rise even further, all homeowners could benefit from shopping for a remortgage early.

Waiting could cause regret. The best remortgage offers could be pulled from the market with little notice. When the recent announcement about tax cuts and the mini budget were made, lenders reacted quickly. The result was fewer remortgage products on the market and the lowest offers had disappeared. This occurred without action by the MPC with a rate hike. It was simply lender’s reactions to expectations and risks in the economy.

Waiting could put a homeowner in a position of having fewer choices, missing out on lower rates, and it could have them facing tightened lending practices.

There is also the risk of waiting and then finding one’s mortgage is underwater when a remortgage is needed, only to find they cannot qualify for a new deal. Being underwater on a mortgage is when the value of a property has dropped to a level under the amount of debt owed on the property. This could easily happen to new homebuyers that have purchased in the last five years should property values begin to decline as home buyers exit the market.

With declining house prices, homeowners could expect their property values to decline, and more so in some areas than others. Remortgaging when their loan to value is above water versus below water as it is called, is smart strategy rather than waiting and getting into a difficult situation. To remortgage when a homeowner is underwater, they must pay off the debt that is over value of the property and down to a level that puts their loan below likely 80% of the value of the property to qualify for attractive remortgage deals.

Waiting is really not suggested when it comes to remortgaging these days. Experts are strongly suggesting all homeowners to shop for a remortgage sooner rather than later. It is quick and easy to do online. One could visit remortgage lender websites to get quotes in hand to review. It only takes minutes to have the quotes in hand. Visiting a remortgage broker site is even more convenient as it could offer many quotes from a variety of lenders to review and compare for the best remortgage. Brokers could have exclusive deals which would make the time spent shopping at their site worthwhile.

There are financial strains in place with the current economy, and for many the strains will be more strongly felt in the months ahead. Homeowners have a unique opportunity to lock in a lower repayment rate now rather than face higher ones into the coming months and next year. Doing so could make a difference in weathering out the storm and coming out of it stronger than had they chosen not to take advantage of a remortgage opportunity.