Homeowners seeking a remortgage are finding a drop in house prices has resulted in a drop in their equity.  With that has come less attractive rates available on remortgage deals.  Their choice is either to remortgage at a less attractive rate or to risk a possible interest rate increase, and wait while paying down debt.  By paying down debt they are increasing their equity and bringing themselves into levels that will offer better rates on a remortgage.  Yet some will find overpaying can have a fee involved robbing them of their intended mortgage repayment money.

Analysts are less than optimistic when it comes to forecasting the future of house prices.  Some believe there will be a slight decline before levels rise again, while many more believe there will be years of house prices falling.  According to the Nationwide House Prices Index, house prices edged up a mere 0.3 per cent in May.  With the 0.2 per cent decline from the previous month, it left little to cheer about that there had been such slight rise for the month.  In comparison to one year ago, the average price is 1.2 per cent lower. 

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), remarked, “The Nationwide data provides further evidence of a largely stagnant residential market. This follows on from numbers on the level of transactions published earlier in the week by the HMRC and the BBA, both of which showed a broadly flat trend in sales.

"Meanwhile the forward looking indicators from the last RICS Housing Market Survey suggest that there is little reason to expect an improvement in turnover in the near term. A combination of factors including uncertainty over the outlook for the economy and an ongoing reluctance from the banks to make finance more readily is continuing to cast a pall over the sales market.”