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To remortgage or not to remortgage? The housing market outlook for 2022

Category: News

Figures recently released from the Office for National Statistics (ONS) confirm that average house prices in the UK increased by more than 10% from January to October 2021.

Average UK house prices reached £268,000 by the end of last year, with the average property in London reaching more than twice that.

As the “race for space” slows and pent-up demand following the Stamp Duty holiday diminishes, the high-inflation economy will also have an impact on markets.

The Bank of England (BoE) has opted for a gradual rise in the base rate – it reached 0.5% earlier in February – and could be set to increase further.

What does the year hold for house prices and mortgage rates, and is now a good time to consider remortgaging?

Keep reading to find out.

Forecasts are for continued growth as consumer confidence remains high for 2022

While the market is expected to slow this year, this is only to be expected after a record-breaking 2021. Likewise, recent BoE base rate rises come off the back of a double drop to historic lows at the start of 2020.

Property Reporter recently stated that almost half of Brits believe the housing market will continue to rise.

Confident consumers tend to mean a healthy market and a willingness to buy, leading to continued growth, although this confidence might be tempered by short-term factors such as the continued threat of new coronavirus variants.

The global supply crisis could also cause issues over the coming months, especially in the wake of Russia’s invasion of Ukraine, exacerbating the lack of materials at a time of increased demand.

The low interest rates of 2020 made larger loans affordable, and although rising rates will make borrowing more expensive, the base rate remains significantly lower than historic values over the last few decades.

Property site Rightmove predicts growth of 5% in asking prices in the new year, while estate agents Savills predict a 3.5% rise for 2022.

The race for space brought about by coronavirus lockdowns means that house prices in London could rise slower than in other parts of the country. The rise in working from home has reduced the need to live in London or the commuter belt and seen many city workers flee to rural areas.

Savills forecast a 2% rise for London in 2022 and an overall increase of 5.6% by 2026, compared to a 13% average for the UK as a whole.

Check-in with online calculators such as the Nationwide Pricing Index to get an idea of what your house is worth. Simply input your region or postcode and the date the property was last valued and get an instant comparison.

Note: Remember though, that these calculators will only ever provide a guide figure and that you should consult a local estate agent or surveyor for an accurate property valuation.

2022 could be a great time to remortgage for some

While the BoE’s base rate rise to 0.5% was small, it will affect the mortgage market. This could be especially true in light of the publicised appetite for a higher rate rise among committee members, with some pressing for a rise to 0.75%.

If you have a fixed-rate mortgage, then the changes won’t affect your payments but it is worth checking when your current deal runs out. At this point, you will revert to your lender’s standard variable rate (SVR).

For those already on your lender’s SVR, you might feel the effects of an interest rate rise and might consider remortgaging. Be sure to check if an early exit would leave you liable to any early payment charges.

Your options aren’t as clear cut with a tracker mortgage. You might opt to stay with your current deal or anticipate future interest rate rises and fix your rate now.

The BoE base rate hit an historic low of 0.1% in March 2020. At this point, the only way was up and the recent rise to 0.5% is unlikely to be the last rise we see in 2022.

Get in touch

The general outlook for the property market in 2022 is a positive one. If you’d like to talk to someone about your plans for 2022, contact us now to see how our expert financial planners and mortgage advisers could help you. Get in touch by emailing or call 03452 100 100.

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