Home prices have recently seen the strongest recovery in more than two years. However, many mortgage industry experts are predicting that the recent trend for increasing home values and low rates will be over all too soon. If they’re right, homeowners who are still sitting on the fence about remortgaging may want to make their way to the other side.

Homeowners Have an Opportunity to Recover

Borrowers who have the lenders standard variable rate (SVR) or a high interest rate loan due to low equity or bad credit are great candidates for current remortgage programs. The recent improvement in values puts many homeowners in a better equity position than they had with their last loan. In fact, due to the rise in recent home prices, many borrowers can now qualify for a lower loan-to-value bracket, which bodes well for those looking for competitive interest rates. Programs like Coventry’s two-year fixed rate program could yield savings as high as £2000. This makes quite a case for remortgaging!

The Current School of Thought on Remortgaging

Melanie Bien, director of mortgage broker Savills Private Finance, predicts property prices to fall by about 6% over 2010. However, should you remortgage now?

Bien advises that if your current standard variable rate is 3% or lower, you may wish to consider staying with your current loan. Even if the base rate increases by a quarter point by the end of 2010, you will still enjoy a competitive rate. However, should your current standard variable rate be 5% or 6%, then it may be wise to remortgage at today’s lower rates to lock in the savings.

The opinions of other industry experts are very much in sync with Savills. Michael White, chief executive of broker Email Mortgages, is concerned that we’ll see another return of the mortgage pipeline rush as homeowners scramble to change their loan terms before conditions begin the downward slope.

Explaining further, White argues that the base bank rate could quickly move back into its “normal” range, which is typically 3% to 4%. The impact on borrowers would be quite negative, resulting in higher SVRs and larger monthly mortgage payments. By taking swift action in 2010, home owners can prevent the increase in costs from occurring.

Looking to the Future of Remortgages

The remortgage market is certainly contingent upon the base rate issued by the Bank of England. Given the fact that inflation in the UK is on the rise, with the CPI increasing from 1.5% to 19.% in November, the Bank of England may indeed increase the base rate in order to stave off inflationary trends.

In the current market, two-year fixed mortgage rates have been recently reduced, and if these rates are more competitive than your existing ones, then it may be wise to remortgage. Otherwise, there are tracker rates that are currently very enticing, but these are only ideal if you believe that the Bank of England’s base rate will not increase significantly in the next year.

2010 will certainly reveal the Bank of England’s intention to adjust the base rate, and depending upon your current mortgage, it may be the ideal year for you to remortgage for the best rates possible.