Due to cheaper borrowing rates from lenders, home buyers responded to the opportunity and the UK housing market experienced the fastest annual growth in two years for November. According to Nationwide, the average house price grew by 3.7% compared to November 2023. This level of growth in the housing market was surprising to experts. Despite lower interest rates, house prices remain elevated, and consumers have yet to fully feel the relief from lower inflation to have found saving for a deposit affordable. As a result of the boost in the market, the increase in house prices is likely to increase property values of homeowners at a time when getting the best remortgaging rate possible is important.

Remortgaging, though not usually as long and tedious as when first purchasing a home, does involve some of the same considerations during the process. For example, the loan to value or LTV determines the risk in lending and the lower the ratio the more likely the better rate opportunities. This is why when purchasing it is advantageous to offer a larger deposit. 

When a homeowner comes to the end of their mortgage term and chooses to remortgage, they will again be offered interest rates according to their LTV ratio. The value of their home should increase as years go by and the LTV will lower, but for some homeowners the long wait for building equity is unneeded because the UK housing market has at times put large equity amounts onto property simply due to strong demand from buyers.

This occurred exponentially during the pandemic when a homeowner could almost experience daily value increases as the buying frenzy proceeded for years. Homeowners in earlier years would have had to wait a decade or more for equity increases that mounted up over only months.

The growth in the housing market is also a strong indicator of the confidence in the future of the economy. 

The demand might also be fueled by growing rental costs. Many renters are crunching the numbers and discovering that becoming a homeowner could save them money and their expenditures will be investing into their own property whereas the more expensive rental costs are disappearing from their budget without the benefit of there being a property asset.

Another reason home buyers could be showing up strongly in the market is due to the expected buying caused by the stamp duty change at the end of March. The discount offered for the last two years will be reversed. The level at which one must pay a stamp duty will be lowered back to the original on 1 April 2025. 

The increase cost in becoming a homeowner after the stamp duty change is expected to push hopeful home buyers to act prior and take advantage of the discount. Perhaps, those understanding the expected rush of buyers chose to purchase in November to have the opportunity to save and choose from a greater supply of properties on the market.

The month to month increase in the UK house price according to Nationwide was 1.2%. This was also the largest month to month increase since March 2022. The average house price grew to £268,144, which is only slightly below the record high reached in August 2022 of £273,751.

While a robust housing market is good for the economy, homeowners, sellers, and those connected to the housing market through connected businesses, it could hurt first time home buyers to the point of shutting them out. Many might find affordability is out of reach due to higher house prices no matter the lower lending rates. It may be more so when the stamp duty returns from being obligatory after £425,000 to being required for homes at £300,000 or more on 1 April next year. 

Continued growth in the market is expected as inflation is tamed, interest rates decline, and wage growth continues throughout 2025.