Homeowners should pay attention once again to the warnings growing more troublesome from experts. There had been the call for caution of possible surging interest rates, that lending would tighten and some homeowners would find it harder to qualify for a remortgage than it had been to mortgage. All of those things have occurred and are getting even more worrisome.  Now the warning is to remortgage before you cannot for property value declines could be on the way as it would push many homeowners into negative equity.

Homeowners that have not yet built enough equity into their property could be in danger of falling into negative equity should their property value decline below their debt level. Newer homeowners are the most likely to suffer this problem, and unfortunately newer homeowners are the most likely to already be struggling as interest rates have climbed. Being in negative equity prevents a homeowner from remortgaging, and a remortgage is likely the best opportunity to save money.

The Bank of England’s Monetary Policy Committee (MPC) has voted during each of the last thirteen consecutive meetings to increase the standard base interest rate to reduce inflation. It has stubbornly remained high and was last reported at 8.7%, which is more than four times the Bank’s target rate of 2.0%. More rate hikes are expected and the next meeting is the first week of August. Forecasts are for another 0.50% hike as occurred in the June meeting which will move the base rate to 5.5%. 

For homeowners coming to the end of their mortgage term this year, such a rate could cause affordability issues. This is especially true for those that secured a fixed rate two years ago that is ending this year. The rates two years ago were historically low as the Bank’s rate was almost zero at 0.1%. Coming off a lender’s historically low rate to one that is the highest in over a decade might be difficult for the homeowner that is not prepared for such a higher cost repayment. Also, a fixed rate deal would have been a shield against the rising rates.

At the end of a homeowner’s term, they have the choice to remortgage or to allow the lender to move them to their standard variable rate (SVR). The SVR is likely a higher rate than would be found with a remortgage, sometimes double or more the average remortgage. A remortgage could offer savings by avoiding a SVR, and a remortgage would allow the choice of a fixed rate to avoid rate hikes for the duration of the new term.

It's easy to shop for a remortgage online to discover what deals are available. A remortgage broker website could offer deals not available directly from a lender to borrowers and because they work with many lenders, they could provide numerous quotes to review and compare. Homeowners could also go from remortgage lender website to website to gather quotes.

Homeowners that have yet to remortgage if they are coming to the end of their deal should definitely consider shopping for a deal. Most will find they can remortgage six months before their term expires without a penalty fee. With rates due to rise several times this year it would be good to seek a remortgage if their term is ending or they have already been moved to a SVR.

Those with little equity should do so before property values decline and a remortgage is out of reach. According to a think tank, house prices could decline by 25% if interest rates continue to rise, but inflation is far from under control and it is a greater threat to the economy, therefore rates will likely continue to increase. 

When the average house price in the housing market declines, so will property values in some areas. There is nothing a homeowner can do as the housing market demand declines due to factors making home buyers step back. They must endure the lack of buyers which in turn can push property values into decline.

Experts have long touted the benefits of shopping for a remortgage by all homeowners no matter where they are in their mortgage term. It will allow those in need to gather quotes to make an informed decision to best weather their financial situation, while others can use the information to prepare for what is to come.