Homeowners looking to remortgage can benefit when they have a substantial amount of equity.  Lenders offer better interest rates and better deals to those that have high deposits or large equity levels.  Homeowners all over the UK, except for London areas, have been experiencing a reduction in equity or a slowed equity growth.  Only when the housing market has a return of buyers will property values start to rise and allow homeowners to recoup the equity levels lost over the past few years.

Increasing buyer demand is what the government has tried to accomplish with the new Help to Buy scheme.  The scheme is built to allow buyers to purchase a £600,000 property or less with a lower deposit of 5% of the purchase price with the government providing an interest free loan for the rest of the deposit required. 

According to Ernst & Young Item Club there are a possible million buyers that could enter the housing market in 2013.  The reasoning behind the optimistic forecast is based on expected increases in incomes due to personal tax allowances, low mortgage interest rates, and the Help to Buy scheme.

“We think one million families will move house in the coming year, a sharp increase from the recent level of 800,000, driving higher house prices, additional housing-related spending, and ultimately construction,” the report stated.

Peter Spencer, chief economic adviser to the Ernst & Young Item Club, stated “With export markets continuing to disappoint, the Chancellor has focused his firepower on the home front. And the timing couldn’t have been better. Real incomes are already starting to recover, mortgages are becoming more readily available, and homes are more affordable as the house price to earnings ratio continues to fall.”