There is Good News and Bad News in the UK Housing Market

There is Good News and Bad News in the UK Housing Market

With rising interest rates and growing inflation making saving money for a deposit difficult, the housing market has lost the attention of hopeful home buyers. Home sellers have dropped their asking prices to find buyers, and according to Rightmove the average asking price in January is £8,720 less than the peak asking price of October. However, the average asking price increased by £3,301 In January after declining in the two months prior.

The increase in the average asking price could be a hopeful sign. Not only could it mean that buyers are returning to the market, but that homeowners can exhale a breath of relief that property values might remain at a safe level and save them from negative equity for the time being.

The decline in asking prices after record jumps throughout the pandemic, could have put affordability in a sweet spot for hopeful buyers. The lack of supply in the market could contribute as well with buyers seeking cheaper prices and there still being the need to take action or miss out on a desirable purchase.

Rightmove also reported there has been an increase in homeowners asking for valuations. This could be a move by those seeking to begin the process to sell. Valuations were at their highest request level since August last week, and on January 5th it was the third busiest day for requests on record.

Another motivating factor could be the recent decline in interest rate offers from lenders. It is not a significant decline, but one that would make home buyers notice and choose to complete a purchase rather than possibly face higher rates when the Bank of England’s Monetary Policy Committee (MPC) meets in February to discuss the state of the economy and another possible rate hike.

The standard base interest rate was increased at the last MPC meeting in December to 3.5%. 

The recent data released by Rightmove was called a reason for positivity by Tim Bannister, Rightmove Director of Property Science. He remarked, “The early-bird sellers who are already on the market and have priced correctly are likely to reap the benefits of the bounce in buyer activity, while over-valuing sellers may get caught out as property stock builds.”

The boost in the housing market, as mentioned, could be a hopeful outcome for homeowners. Not only could it help retain property values, but future home sellers could be encouraged the window is still open to finding buyers. 

Negative equity has been a concern of experts. It occurs when the value of a property falls below the debt level of a mortgage loan. In negative equity, a homeowner is out of reach of a remortgage which could be helpful to homeowners as interest rates are on the rise.

Thousands of homeowners are due to come to the end of their mortgage term in 2023. Homeowners could be facing the choice of a new interest rate that might be double or more the usual interest rate they were paying. For some, there has been a concern of affordability. This is especially true for those that skip the choice to remortgage at the end of their term and allow their lender to move them to the lender’s standard variable rate (SVR).

A SVR is usually much higher than the interest rate levels offered by lenders. Paying more than necessary should be avoided and remortgaging could be the path to saving from a SVR and with a fixed rate deal it would shield from further rate hikes which leads to more savings overall.

While the Bank’s current base rate is 3.5%, it has been forecasted the rate will increase to 4.8% by the end of the year. This reveals the increase expected for those that do not remortgage could significantly impact their household budget. 

It is simple to shop for a remortgage online. Quotes could be gathered to review and compare by visiting websites of remortgage lenders. Visiting the site of a remortgage broker could offer numerous quotes from a variety of lenders during a one-stop shopping experience. Brokers could also have exclusive deals for homeowners that would not be offered directly from a lender.

With a boost in the UK housing market, and some lenders relaxing their interest rate offers it could be smart to consider a remortgage sooner rather than later before there is a change and homeowners miss out on the opportunity to save and gain peace of mind from further rate increases throughout the year.

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