The current economy is shifting the housing market and due to higher interest rates along with high pricing a slow down is likely to occur. There could be a shock wave to the market as first-time buyers are shut out of the market and homeowners are pressured to stay put rather than upgrade or downgrade due to pricing and interest rates. Rather than a slow and steady correction to the market following the pandemic induced race for space in the market, it could be a faster cool off or even a freeze.

There is the possibility that first time buyers could remain in the market much longer than expected. Despite higher prices and more expensive borrowing, rent costs are so high that many could determine the only choice is to stay in the market. If so, this could help keep the housing market from cooling off too fast.

There are millions of homeowners approaching the end of their mortgage term. Warnings from experts are to remortgage rather than allow the lender to move the loan to their standard variable rate or SVR. Doing so could have homeowners on an interest rate that will likely increase several times over the next months and could be double or more the level found with a remortgage. 

Rather than pay more than necessary and strain their household budget when inflation is already making an impact, experts encourage all homeowners to shop for a remortgage. The opportunity to remortgage is influencing some homeowners to end their mortgage deal early and take on a penalty fee to allow them to get a deal with current interest rate levels rather than face higher rates in the future.

Because remortgaging could offer a safety net against rising rates with a fixed interest rate choice, homeowners could be weighing staying put as a better choice than entering the market. Especially so for those that are considering an equity cash release remortgage to not only secure a low interest rate, lock in the rate with a fixed rate, but also put money in hand by cashing out built up equity.

Another viewpoint on the housing market and the house prices pressuring homeowners to stay put rather than move home is how it will impact supply. Currently demand is much stronger than supply in the market, and it is keeping house prices at record breaking levels. It will stay that way if homeowners feel they cannot enter the market for upgrades or downgrades in their property sizes. With fewer starter homes coming into the market, first time buyers will see already low supply become even more scarce.

There are many ways to consider the market and how it will perform with higher house prices, higher interest rates, higher inflation, and lower supply overall. The housing market is expected to cool, but how much is still an unknown. Factors at play could chill it rapidly, slowly, or result in surprising resilience. 

The market will then cause action or a lack of it by homeowners. It’s expected homeowners that might have planned to move home will instead wait, stay put, and take advantage of the financial relief that could be found from remortgaging.