Remortgage offerings presented to homeowners are dependent on many lending criteria and one of those that can heavily affect the interest rate level offered is built equity in the property.  Without adequate equity not only are the best remortgages off the table but many homeowners are not able to close a deal.  As house prices have fallen in most areas in the UK homeowners have had to watch their equity decline.  For the thousands of homeowners that have fallen into negative equity the issue that house prices will continue to decline in the coming year is unfortunate.

House prices are declining due to low demand from buyers.  Hopeful buyers have had a hard time gaining approval for purchases since the credit crisis.  There used to be numerous first time buyer mortgages with 95 per cent loan to value levels yet now there are few if any close to that level on a given day to choose from.  For those high loan to value mortgages borrowers must have nearly perfect credit scores. 

There has also been a move toward paying off debt versus taking on debt in the current economy.  As consumers seek to pay down debt those homeowner hopefuls that had wanted to buy a new home previously will be better prepared to gain approval in the future.  There are also those that believe they could end up with buyer’s remorse by buying before house prices bottom out. 

Without buyers showing more demand there is unlikely to be any growth in house prices and for those homeowners looking to grab a cheap remortgage the best will be out of reach without adequate equity levels.