Remortgage Opportunities Helped by Resilient UK Housing Market

Remortgage Opportunities Helped by Resilient UK Housing Market

In a maybe not so surprising data release, Rightmove reported home buyers are not only staying in the market, but others are returning as confidence grows. Many experts forecasted a strong chill in the housing market due to rising interest rates. However, the housing market has remained resilient. Not only has it perhaps survived the worst, but optimism could be growing, which is a good sign for sellers as well as homeowners concerned about a decline in property values.

Rightmove, an online property listing site, revealed asking prices grew in May by more than any previous month this year. The average price grew 1.0%, and homes coming onto the housing market increased by 1.8% from April. 

The forecast had been for house prices to decline by 15% by the middle of 2024. 

Month by month, home buyers have stayed in the market. Buyers have been helped by lenders holding back from pushing rates upward despite the recent increase by the Bank of England’s Monetary Policy Committee (MPC). With a competitive mode remaining in the lending market, home buyers will find plenty of mortgage products available and lenders open to working with many borrowers to realize their dream of climbing onto the property ladder.

The strength remaining in the market will allow homeowners to exhale with relief. Declining attention in the housing market and falling house prices impacts property values and holding onto built up equity will be important to homeowners seeking remortgages.

The ability to remortgage as interest rates have risen could be for some the difference in helping them to afford their repayments. 

The two-year mark has or will be reached on the calendar for almost two million homeowners in 2023. Rates offered from lenders two years ago were very different to what is available on the lending market currently. The Bank’s standard base rate has risen in that time from almost zero at 0.1% to 4.5%. 

When a mortgage term ends, the homeowner has the opportunity to either remortgage or allow the lender to move them to their standard variable rate (SVR). Choosing a remortgage over accepting a SVR could save a homeowner a substantial amount of money. A SVR could be double or more the rate found with a remortgage and with a remortgage the homeowner could choose a fixed rate deal to lock in their rate. 

A fixed rate remortgage will shield the homeowner from further rate hikes by the MPC. It has been forecasted the rate will likely reach 5.0% in 2023. If the MPC follows their recent trend of increasing the rate by 0.25%, there could be at least two more rate hikes yet to come.

During the remortgaging process, lenders take into consideration the homeowner’s loan to value (LTV) ratio. The higher the property value to the debt remaining on the property the better the remortgaging offers for the homeowner. When property values decline below the debt on the property, the homeowner is in negative equity and will be out of reach of a remortgage and could become a long time prisoner to their lender’s SVR. 

Because the housing market has remained resilient, homeowners could not only be retaining their built-up equity but also gaining some. This is good news when only months ago the reports were less optimistic.

Built up equity not only helps with a LTV and gaining the homeowner lower interest rate offers, but homeowners could also cash out their built-up equity with an equity cash release remortgage. The cash in hand can be used as the homeowner desires. Some have used the funds to upgrade their home to push the value even further up, while others have used their money to consolidate debt, to build an emergency fund, or to pay for a family holiday long needed after years of pandemic staycations.

Rightmove reported buyer demand increased by 3.0% in May over the level of demand in 2019 before

 the pandemic began to impact the economy and the housing market.

The summer could bring another boost to the market as well as the July implementation of consumer confidence building steps to be taken by lenders according to the Financial Conduct Authority (FCA).

While the lending market is competitive, the housing market is showing strong signs of helping homeowners hold onto property values, and economists offer an optimistic outlook as the UK escapes the grips of a recession, homeowners are encouraged to take advantage of remortgage opportunities. 

Obligation Free Remortgage Quotations

Get a Quote »