When it comes to paying interest rates, other than business owners, perhaps the most likely impacted are homeowners and home buyers. Property is expensive. Buying a home could be the most expensive item ever purchased, other than perhaps another home. Interest rates matter because borrowing the funds to buy a home costs money. The interest rate on a mortgage is much like the interest rate on a credit card. The higher the interest rate, the more it is going to cost to borrow, and the more it is going to cost overall to pay down the debt.

The expected announcement for or against extending the stamp duty holiday is now days away. The tax discount was put into place last summer to bring more interest to the housing market, a critical sector of the UK economy. It worked as many first time buyers and home movers benefitted by the possible up to £15,000 savings. The higher demand has caused delays in the property buying process which is also impacted by work restrictions due to the pandemic, and it has pushed up house prices.

In July 2020, in an effort to boost what was expected to be a failing housing market in the midst of the pandemic, Chancellor Rishi Sunak offered a Stamp Duty holiday. There would be zero percent in tax for properties purchased below £500,000 until 31 March, 2021. It is believed that the opportunity to save money prompted the action of hopeful home buyers and home movers to put attention on the housing market. Now with the holiday due to end in weeks, there is a call to extend the benefit to secure the health of the housing market and the overall economy.

There seems to be no slowing down those looking to buy a property. Reasons behind the high demand from home buyers are varied, but studies have indicated that most are looking for a dwelling that better suits their pandemic lifestyle needs. Even after the pandemic slows down and ends, it is expected that the newly discovered lifestyles will remain important and therefore home life is driving demand. However, with fewer new properties coming to the market, house prices are continuing to rise and it is making it more difficult to climb onto the property ladder.

Homeowners have likely never had such an opportunity to save as they do right now. The Bank of England, in response to the impact of the pandemic on the economy, cut the standard base rate to a 300 year low record of 0.1%. Lenders soon took action and cut their remortgage rates to very attractive lows. In the beginning, homeowners took advantage of the remortgage savings possible, but the demand slowed. Homeowners allowed their mortgage term to lapse and rather than remortgage were moved to their lender’s standard variable rate (SVR) and in doing so made the choice to pay out more money than necessary.

Homeowners have been showing more demand for remortgaging. With reports out that a homeowner could likely find savings in a lower interest rate compared to the level they were paying on their mortgage, and perhaps a rate lower by half or more than their lender’s standard variable rate (SVR), it makes sense to shop for a remortgage. The ease in shopping for a remortgage online makes the process quick and easy. However, there are few things, and especially one thing that homeowners need to keep in mind.