The forecast for the UK housing market is for a cooling down from the past few years of tremendous growth. During the pandemic and the race for space buying frenzy that resulted, home buyers showed such a strong demand that records were broken month after month. Hopeful home buyers remained despite the higher asking prices due to historic low interest rates. For much of the previous two years, the Bank of England’s standard base interest rate had been at almost zero at 0.1% making borrowing more affordable than it had been in generations.

However, inflation began to grow far past the Bank’s target rate of 2.0%, which triggered the beginning of what would be nine consecutive meetings of the Monetary Policy Committee (MPC) that resulted in the Bank’s base rate increasing to 3.50%.

Due to higher interest rates, affordability became an issue. Home buyers are dealing with inflation, higher energy costs, and facing more expensive borrowing, which are all taking a toll on their budgets. It has become more difficult to save for a deposit, as well as making it difficult to afford higher repayments.

Therefore, the UK housing market has started to cool off. Buyers are exiting the market and first time home buyers are being closed out. This causes concern for the UK economy and a concern for homeowners.

Homeowners could begin to see their property values decline as the housing market cools. For those that have not built up adequate equity in their property, they could fall into negative equity. This occurs when the property value falls beneath the level of debt, making the homeowner’s debt greater than the home’s market worth.

When in negative equity, a homeowner is unable to remortgage and remortgaging is an opportunity to find relief from the more expensive interest rates. Experts have encouraged shopping for a remortgage for all homeowners. There are millions that will come to the end of their term in the next year and will need to choose from remortgaging offers or allow their lender to move them to their standard variable rate (SVR). An SVR is typically a higher rate than what is offered with remortgaging, so savings could be found with a remortgage. By choosing a fixed rate remortgage, a homeowner could recover more savings by avoiding further rate hikes. 

While remortgaging could offer savings and peace of mind, those in negative equity will find it close to impossible to remortgage. The time to shop for a deal is now before the housing market cools further and before interest rates rise higher.

There are schemes being put in place to help homeowners that find their repayments have become unaffordable, but preparing now rather than hoping for an answer could be a better strategy.

Because remortgaging could be helpful, shopping for one sooner rather than later is encouraged. Spending a few minutes online at the website of a remortgage lender could put a quote in hand to review. Shopping with other lenders would provide quotes to compare to find the best remortgage offer. 

Homeowners should also consider online shopping with a remortgage broker. It is a one-stop shopping opportunity to get several quotes from a variety of lenders. Brokers often have exclusive offers which could make shopping with a broker a must do.

Homeowners that have already come to the end of their mortgage term and are on their lender’s SVR could be saving money now with remortgaging. Those that are not at the end of their term, could as some have done and taken on a penalty fee to end their term early to allow remortgaging now. They believe it is a good financial decision to remortgage at current rates rather than face possible higher interest rates in the months ahead when their term would have ended.

The current financial situation is difficult, and for homeowners there are unique circumstances that could make it even more difficult due to rising interest rates and more expensive repayments. Rather than endure, perhaps a remortgage could be helpful, and finding out is as easy as shopping online.