According to recent reports, the UK housing market has realized stronger demand from buyers in the last two months. In August, the average house price data revealed the largest increase in two years. According to those on the inside of the housing market, new attention from buyers in the market has increased as mortgage interest rates have dropped.

The Royal Institution of Chartered Surveyors (RICS) released their August UK Residential Survey and marked a noticeable increase in sales and demand from hopeful home buyers. According to the report, those responding gave a 15% score for new buyer inquires, which is a jump from the 4% reported last month. It was also the most positive reading for this data point since October 2021.

The data also noted an optimistic viewpoint of the future with the expectation for the next three months, the last quarter of the year, to see an increase as well as next year. Those responding also noted the supply of listed properties on the market has increased.

Simon Rubinsohn, chief economist of RICS, remarked, “The latest RICS survey captures an improvement in sentiment over the past month in the wake of the modest decline in mortgage rates, with buyer interest improving, albeit from a relatively low base, and stock levels edging up. 

“However, anecdotal remarks from respondents still demonstrate the need for realistic pricing to get deals done with uncertainty both around the scope for further interest rate cuts and the likely contents of the forthcoming Budget keeping the mood in check.”

The increase in demand in the housing market will require sellers to be realistic in their pricing considering the mortgage rates are better than they were, but nothing near the level of the past few years during the pandemic buying frenzy. Also, home buyers have been hampered in saving for a deposit due to years of inflation. Pricing competitively will keep buyers in the market, and they will get a sale much sooner. According to a recent report those pricing competitively will sell their home in an average of 20 days while those overpricing and then marking their asking price lower will spend an average of over 70 days waiting on a deal.

Lower mortgage rates, many of which are lower than the current standard base interest rate of the Bank of England, are helping to fuel the current demand in the market. The base rate was reduced by the Monetary Policy Committee (MPC) on 1 August from 5.25% to 5.0%. It was the first rate cut by the MPC since March 2020.

Lenders optimistic of the first rate cut in four years began to cut their own rate offerings before the MPC voted for a reduction. Following the MPC majority vote, lenders became even more competitive and currently there are mortgage deals to be found that are below the base rate of 5.0% and some near or below 4.0%.

The boost in the housing market is also a boost for homeowners. There had been fears not so very long ago, as the MPC was raising rates and inflation remained well above the target rate of 2.0%, that homeowners could be in danger of going into negative equity. That is a situation that would deny homeowners a much needed remortgage. It occurs when the homeowner’s property value declines below the debt held by the lender on the property. 

Now, with the housing market showing signs of continued demand, the worry of negative equity is no more. Homeowners are likely to see their property values increase. This will be beneficial for those looking to remortgage as it will assist their loan to value or LTV ratios which will bring better interest rates.

While remortgage interest rates were not declining to the levels of mortgage deals, they have now begun to catch up with the competitive lending trend.

Experts encourage homeowners that previously shopped for deals to do so again, as they may find waiting for better rates is no longer needed. Many lenders have remortgage deals at levels that would be expected after a second cut to the base rate, which has yet to happen.

Shopping online for a remortgage is quick and easy. In a matter of minutes after answering a few questions, a homeowner could have quotes available to review and compare to find the best remortgage deal. Shopping online with a remortgage broker could not only offer exclusive deals for the homeowner not available directly from a lender, but also quotes from a variety of lenders to easily narrow down the best offers to consider. Homeowners could also go from lender website to lender website to obtain quotes to review.

Now that lender rates are exceptionally attractive, it would be a smart strategy to shop for remortgage quotes. No matter where a homeowner is in their current mortgage term, whether sitting at the end of it and in need of a remortgage to escape a standard variable rate or SVR of their lender, or not yet at the end of their term but looking to gather important information to form a future plan, shopping online for a remortgage is a great first step to finding what deals are available and what savings could be secured.