In another sign that the housing market is shifting, asking prices fell by the sharpest decline since 2018 according to Rightmove. The online property listing website reported that despite the decline, house prices still remain above pre-pandemic levels by 20.0%. The average house price of properties coming onto the market was £364,895. 

With record wage growth, lower mortgage rates due to a competitive lending market, and lower asking prices, the housing market could gain the attention of hopeful home buyers who had stepped away from buying. Therefore, it remains to be seen if the housing market will cool further or it could experience a boost and reveal again that it can remain resilient despite gloom and doom forecasts.

The housing market is important not only to home buyers and home sellers. The health of the housing market has an impact on the overall state of the economy. It also matters to homeowners, especially those seeking a remortgage.

When the housing market in an area has strong demand and house prices increase, so normally do property values. The property value in relation to a homeowner’s debt is used to determine what remortgage deals are made available to them. The loan to value or LTV is used for remortgaging much like it is used in the purchase of the home for a mortgage. The lower the ratio of loan to value, the better interest rates offered to the borrower as the risk in lending is lower.

A concern for homeowners has arisen several times as interest rates have increased, warning those that might dip into negative equity to be alert and understand they would be out of reach of a remortgage, which could be the one opportunity to help keep the debt affordable for a homeowner.

Negative equity occurs when the property value declines below the amount of debt. For fairly new homeowners, negative equity can be a threat when the housing market begins to cool as they have not paid very long on their debt and their equity will not be padded enough to withstand declines in property values.

A decline into negative equity could cause a homeowner to become a prisoner of their mortgage, unable to remortgage to a more favorable interest rate and stuck on the lender’s standard variable rate. 

When a homeowner comes to the end of their mortgage term, they have the opportunity to remortgage for a new interest rate as their old one has expired. Without the choice of a remortgage, the lender will move the homeowner’s debt to the lender’s standard variable rate (SVR). A remortgage offers lower interest rate offers than a SVR, as well as the ability to choose a fixed rate to secure the interest rate and avoid further rate hikes. A remortgage, therefore, offers savings with a lower rate than a SVR and the ability to choose a fixed rate and avoid future rate hikes will save even more.

The Bank of England’s Monetary Policy Committee is expected to increase the standard base rate by at least 0.25% in September. It would be the fifteenth consecutive meeting that resulted in an interest rate increase in order to lower inflation.

Added all together, the lower asking prices, a competitive lending market that has newly developed as borrower demand has decreased due to higher rates, and the expectation of rates increasing in September by the MPC, the housing market could experience a slight boost. It would not be the first time the market has surprised, though it is not likely to reflect the surprise performance of the housing market during the pandemic that was once thought to not only cool down but ice over.

Trying to predict the market can be risky for homeowners and most are likely to create a strategy to take advantage of all opportunities to save money and avoid paying more than necessary by choosing a remortgage. 

The first step for a homeowner is to get reacquainted with their current mortgage and when their current term will end. Also, determining if they have a fixed rate or other type of loan could be helpful as it would determine if they are subject to future rate hikes. Most homeowners can choose a remortgage six months prior to the end of their term without a penalty. This would be an important consideration for those that have thought of ending their term early to allow remortgaging with current lending rates rather than wait out their term and possibly face higher rates.

Shopping for a remortgage online is quick and easy. Simply visiting the website of a remortgage broker could put numerous quotes from a variety of lenders in hand to review and compare. The homeowner could also go from the website of a remortgage lender to another to gather quotes. It should be noted that remortgage brokers could have exclusive deals from lenders not offered directly to borrowers and many experts encourage homeowners to start their remortgage shopping with a broker to make the process easier and so they don’t miss out on an exclusive offer.

The economy, the housing market, the lending market, and the outlook for homeowners coming to the end of their mortgage term could look much different in a matter of days or weeks or months ahead. Better or worse is left to be determined, but for now, there are opportunities not to be missed and since remortgage shopping is so simple to do online, it is the easiest way to gain peace of mind and save money when both are hard to come by.