Homeowners are taking notice of the opportunity available with remortgaging, but many could be missing out. According to a study, a large number of homeowners were completely unaware of the benefit of remortgaging and others had misconceptions of what a remortgage does. In basic terms, remortgaging is getting a new mortgage by the homeowner. When their first mortgage was obtained it was connected to a term, or length of time in which the agreement would be set as to what interest rate would be charged to the homeowner. Once the term ends, the homeowner can allow the lender to move their loan to the lender’s standard variable rate (SVR) or the homeowner could remortgage and secure a loan with the interest rate and terms they desire. 

The current low interest rates, rising rental costs, and the impact of the pandemic have made for strong arguments to buy a home now rather than later. Yet hopeful home buyers are facing a major hurdle in climbing onto the property ladder due to record high asking prices. The lack of supply and strong demand is pushing prices upward and in many cases making homeownership out of reach of first time buyers. 

House prices are expected to continue to rise throughout the first quarter of the year. Supply is extremely low and demand remains high. Experts believe that the continued low interest rates are helping to motivate buyers. In some cases, the continued pandemic is pushing buyers as the desire for space remains a top priority. The possibility of rising rates could also be a motivator as hopeful home buyers take action now that the cost of borrowing is becoming more expensive than it was only weeks ago. However, it could be the simple fact that rental costs are rising.

Homeowners have picked up the pace of remortgaging. It’s a good strategy as getting a new deal could save them hundreds of pounds per month. Finding a lower interest rate could save money, but grabbing a lower fixed rate interest rate locks in the savings for the term of the deal and protects from rising interest rates later on. Because the Bank of England could possibly raise the rates soon, and possibly several times this year, seeking out a remortgage could be a good strategy for all homeowners.

Homeowners have been able to take advantage of low interest rate offers from remortgage lenders and gain a variety of benefits. Some simply sought out a lower rate to save money. Other homeowners not only remortgaged to save money, but also secured a fixed rate deal to secure their low rate throughout the term of their deal rather than face rising rates. There were also some homeowners that turned their built up equity into cash along with their remortgage low interest rate deal.

The UK housing prices grew by a large and unexpected rate in 2021 and while many of the conditions that put the growth into play are still in place, the same rate of growth is not expected for 2022. The pace at which the average house price grew in 2001 was the fastest since 2007 and the largest annual increase since 2003. Halifax reported in their latest data the average house price hit £276,091 at the close of the year in December. The growth almost reached double digits but edged out at 9.8% last year.