Housing Market Growth According to Zoopla as Borrowers Await Lower Rates

Housing Market Growth According to Zoopla as Borrowers Await Lower Rates

For the seventh consecutive month, the UK housing market has experienced growth. This is despite the continued strain for home buyers due to expensive borrowing. This is even more so in April than the first three months of the year. Lenders had begun to lower their mortgage rate deals as a large reaching competitive lending market emerged due to optimism for an early spring cut to the base rate by the Bank of England’s Monetary Policy Committee (MPC). Fast forward to the end of March and forecasts became less optimistic which triggered the lowest rate mortgages to disappear from the lending market. 

No matter the rising rates, home buyers showed up. This could be due to the expectation of higher rates replacing lower ones. For at one point, the rates had declined to below the Bank’s standard base interest rate of 5.25% in the first quarter. Though the best deals are being pulled, home buyers could discover there are still mortgage offers close to or slightly below the base rate. This could be a factor in why buyers turned up in the housing market enough to continue the monthly growth streak.

The April data showing an increase in the housing market came from Zoopla. The volume of sales agreed increased annually by 12% in the four weeks to April 21. 

Richard Donnell, executive director at Zoopla, remarked, “The rebound in sales being agreed continues as mortgage rates have fallen, consumer confidence improves, and home buyers have much greater choice of homes for sale.”

The supply of homes available on the market has contributed to the increased attention from home buyers. According to Zoopla, the average estate agent on its property listing website had an increase in properties listed by 14%. In comparison to the volume of homes available there is an increase of a fifth more.

The growth in the housing market could be insight into what the market will offer when the Bank of England’s MPC does vote for a cut in the base rate. Lenders could respond aggressively to be competitive and once again home buyers will have lower cost borrowing opportunities.

Whether the same cheaper cost borrowing will be made available to homeowners seeking to remortgage is unknown. Currently the demand for remortgaging is not as strong as had been expected.  More demand expectation was due to many homeowners facing a higher rate should they push aside remortgaging and choose to allow their lender to move them to their standard variable rate (SVR). Avoiding a SVR should be a homeowner’s strategy to keep from paying more than necessary.

Some homeowners could be waiting out for the MPC to cut rates to allow their choice of lower rate remortgages. Experts warn that could be an unwise decision. Remortgage rates are attractive now, and the rates homeowners are likely hoping for will not show up even if the MPC cuts the base rate two or three times this year. 

The base rate in April 2022 was only 0.75% and as mentioned it is at 5.25% currently. The forecast is for minimal cuts to the base rate and if the expected two cuts at 0.25% occur, then the base rate will sit at 4.75% by the end of 2024. Lender rates will be higher than the base rate and there are already remortgage deals reflective of that situation on the market.

Those coming off of a two-year fixed rate mortgage this year will not find offers such as those in 2022, but avoiding a SVR could save the homeowner a substantial amount of money. Discovering what deals are available now is easy by simply shopping online with a remortgage broker or lender.

Remortgage brokers could offer numerous quotes from a variety of lenders, and possibly exclusive deals. Homeowners could also go from remortgage lender website to website to gather quotes. Once quotes are offered, the homeowner can review and compare the quotes for the best remortgage deal for their unique needs.

Homeowners could choose a fixed rate, tracker, or variable loan and from different term lengths. If they believe they could choose from much lower rates next year or the one after, then getting a small term deal or one with a lower penalty fee for ending the deal early to remortgage to a lower rate would be an ideal choice for them. The choice to remortgage overall would offer more security and likely a much lower rate than allowing the lender to transition the debt to a SVR.

Meanwhile, the housing market growth offers relief to homeowners once fearful the market would slide downward and take their property values with it. With less of an expectation of property values declining, homeowners can exhale and no longer worry about falling into negative equity and finding a remortgage out of reach.

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