Borrowers, whether homeowners seeking a remortgage or hopeful home buyers shopping for a mortgage, are being warned the best deals could soon disappear. The low interest rate deals available are due to the competitive environment that emerged from lenders hoping to grab the attention of new customers. Stronger demand and a possible delay of a quick cut to the standard base rate of the Bank of England might bring about higher rates despite the Monetary Policy Committee (MPC) holding the base rate steady in the March meeting. 

In another report revealing house prices declined in March, Halifax reported a fall of 1.0%. Nationwide also reported a decline days earlier. The Halifax average house price declined close to £2,900 to £288,430. Despite the lower house price, it is still higher than the same period last year by 0.3%. The March decline follows a boost in February brought about by lender cuts in mortgage offers, with some rates below the Bank of England’s standard base interest rate.

The Bank of England has released the latest information on the housing market and the data reveals a 17-month high in mortgage approvals. Net mortgage approvals for house purchases increased in February to 60,400 from 56,100 recorded in January. The increase exceeded the expectation for growth to 56,500, which was the highest forecast since September 2022 when the Bank of England’s standard base interest rate was at 2.25%. 

The housing market slowed in March, and many factors came together to convince homeowners to sit on the sideline and wait. Of course, there were likely many hopeful home buyers shut out of the market due to affordability. According to Nationwide, the average house price declined by 0.2% from February into March. It is the first time a decline has been recorded in three months. The previous two months experienced a 0.7% increase, and with the recent 0.2% decline, the average house price is £261,142.

Homeowners are being encouraged to shop for a remortgage when they are nearing the end of their mortgage term. If they want to not pay more than necessary, then avoiding their lender’s standard variable rate (SVR) is the best strategy. Without remortgaging, they will be at the mercy of a risky SVR which is normally a higher rate and has been known to be double or more the interest rate that could be found with a remortgage. Also, it is a variable rate which could fluctuate whereas with a remortgage the homeowner could choose a fixed rate and lock in their chosen rate and have the same monthly repayments. Unfortunately, there are homeowners that simply don’t know a remortgage is an option or they believe the remortgage is going to make them take on more debt rather than offer them savings and peace of mind.

There are many homeowners coming to the end of their mortgage term this year. There are a sizable number of those ending that are two-year fixed rate deals obtained in 2022 when the Bank of England’s standard base interest rate was coming off of an historically low base rate of 0.1%. By March 2022, the Monetary Policy Committee (MPC) had increased the base rate for three of what would become fourteen consecutive meetings of rate hikes. Two years ago, this month the base rate was only 0.75% and lenders were offering cheap mortgage and remortgage deals.