As the new year comes, homeowners are looking for answers. Questions could cover whether the Bank of England’s base rate will be cut and lower the cost of borrowing, or if the housing market will be resilient against the gloom and doom forecasts of some, or if property values will hold and keep homeowners from falling into negative equity. There are likely many other questions as homeowners navigate the financial landscape of 2024. Unfortunately, there are fewer knowns about the upcoming economy than there was this time last year for 2023.

External situations that could impact the economy are the conflicts in Gaza and in Ukraine. Locally, the biggest factor is inflation.

Inflation has been on the decline, having reached double digits in early 2023 and falling in the twelve months to December to 3.9%. The target rate of the Bank is 2.0%. While the decline over the year is impressive, it is questioned as to if it was solely due to the assertive action of the Bank’s Monetary Policy Committee (MPC) increasing the standard base interest rate to the current level of 5.25%.

The rate is at a 15 year high. It is hoped it is the peak rate needed to move inflation to target, but should it not, the MPC has communicated it will not hesitate to increase the base rate again if needed. It has been noted the recent decline in the inflation rate could have much to do with the fall in energy prices due to pricing caps versus the higher cost of borrowing. The next few months will offer a better view as to the impact of higher interest rates, and perhaps a more crystal-clear view of how inflation is responding.

As far as homeownership, the greatest negative impact will be to those that are coming to the end of a fixed rate deal in the coming year. If they secured their two-year fixed rate in 2022, rates were low. Interest rates were slowly rising from the historically low almost zero rate of 0.1% that existed up until December 2021.

In January 2022, the base rate was 0.25% and it will be 5.25% in January 2024. 

Homeowners are encouraged to shop for a remortgage. It is perhaps the best possible strategy to avoid paying more than necessary. Without a new deal, the lender will move them to the lender’s standard variable rate (SVR) which could not only be higher, but double or more the rate offered with a remortgage. Also, a remortgage would offer the opportunity for another fixed rate which could shield the homeowner from rate hikes should they occur. 

Remortgages are also a great strategy due to current competitive rates. The lower demand in borrowing due to higher interest rates has led to lenders seeking the attention of borrowers. Rates are lower and some lenders are offering deals below the base rate of the Bank. 

The current competitive offers are not a guarantee. They could disappear as quickly as they were put onto the lending market. The time to remortgage at the best rates might be now, as now one knows what will happen during the next MPC meeting, which will be held in February, or in the next six months as outside factors impact the domestic economy. 

There are no guarantees, no givens, no for sure forecasts. It is best to take advantage of what is known now that could make a difference in helping a homeowner save money and avoid paying too much. Obviously a remortgage is a good place to start.

It helps that shopping for a remortgage is easy. A few minutes spent online with a remortgage broker website could result in numerous remortgage quotes from a variety of lenders. Once quotes are in hand, a homeowner could review and compare them to determine what the best option for their needs would be and take the next step. Of course, homeowners could gather quotes one by one by visiting the sites of remortgage lenders, but they could miss out on an exclusive broker deal from a lender that they do not offer directly to borrowers.

According to recent reports, the economy will struggle in 2024. Perhaps much less than in 2023, but the corrections and gains made will not trickle down to a personal level of consumers until later. High interest rates might remain for much of the year, house prices will lower but they reached such a high threshold that any decline is perhaps a correction needed and not to be regained. Forecasts by UK Finance have called for house prices to lower by 8% next year.

Lower house prices typically lower property values. Not necessarily at the same level of house price declines. Sometimes more, sometimes less, but usually a decline in property values will follow a shift downward of house prices. This is a real concern for homeowners that might suffer from negative equity moving them out of reach of a helpful remortgage.

No matter where a homeowner is in their mortgage term, or what type of loan they have, shopping for a remortgage provides helpful information about what is offered, what is currently available for the homeowner, and what interest rates they qualify for through remortgaging. The information could be motivation to take action to save sooner rather than later, or it might offer insight as to considering future strategies.