Homeowners are being warned to expect a decline in property values next year. This could be an issue for new and fairly new homeowners. As values decline, some could find themselves in negative equity. This occurs when a homeowner’s property value falls below the level of debt on the property. It could easily happen as many in the past few years could have bought their home when house prices were at record highs. 

However, as house prices were breaking records for climbing into higher levels, interest rates were declining to all-time lows. Home buyers could easily have afforded a more expensive property when interest rates were at historic lows, but now that interest rates are climbing higher, affordability could be a problem.

When affordability due to rising interest rates is an issue, homeowners could find relief from the increasing repayment costs by remortgaging. This is especially true for those homeowners that have had their mortgage term end and chose not to remortgage. When they declined the opportunity to remortgage, their loan was attached to the lender’s standard variable rate (SVR). Those on a SVR are usually paying a more expensive or higher interest rate than offered with a remortgage and therefore are paying more than necessary.

Unfortunately, those close to having their term end are likely to face a higher interest rate than what they were used to paying. However, there are still savings to be found. For instance, while the interest chosen might be higher, it could be lower than rates offered in the months ahead. Savings would be found by securing a current rate rather than a future one. Avoiding a SVR could offer more savings, which means a remortgage is likely the best option.

Discovering whether a remortgage would be helpful is easy to do by shopping for one online. Visiting a remortgage broker website could offer several quotes from a variety of lenders to review and compare. One could always visit remortgage lender sites and gather quotes from each one. It should be noted that remortgage brokers might offer exclusive deals from lenders not offered directly to borrowers.

Growing inflation has been the motivation behind the Bank of England’s Monetary Policy Committee (MPC) hiking the standard base rate. It has gone from an all-time low of almost zero at 0.1% last December to 3.5% this December. It is expected that next year the MPC will need to raise the rate to at least 4.5% or higher to wrestle against the steady growth of inflation.

Homeowners looking to avoid being shut out of the opportunity to remortgage due to going into negative equity should consider remortgaging sooner rather than later before it occurs. Also, as previously mentioned, remortgaging before further rate hikes could offer savings. Choosing a fixed rate remortgage would lock in the chosen rate and shield against further increases, thus avoiding higher costs throughout the term no matter how many more rate hikes happen.

Halifax reported a forecast of an 8% decline in house prices next year. The time to prepare for the economic hardships ahead are now. For homeowners, no matter where they are in their mortgage term, a remortgage could be helpful. By remortgage shopping online, homeowners could find out if a source of relief from the financial strains ahead in 2023 has been found.