Vendors opting to remortgage rather than sell
With interest rates increasing, vendors are choosing to remortgage their homes as opposed to selling – causing a slump in the number of homes being bought and sold.
In the wake of the financial crisis of 2007, homeowners have enjoyed low monthly repayments thanks to reduced interest rates. However, with fears growing that the market will face higher rates in the near-future, many owners are choosing to forego the sale of their house in favour of refinancing their homes and enjoying longer-term fixed rate options.
While this news may initially appear to be a good move by owners – especially considering concerns regarding the UK’s impending exit from the EU – the resulting deficit of vendors looking for a new home has left those hoping to sell their house fast with a reduced number of potential buyers.
The forecasts, released by Connells Survey & Valuation, have found that there has been a 3% increase in the number of homeowners choosing to remortgage, and a 4% drop in the number of homeowners requesting valuations in an effort to sell.
“Having benefited from a decade of low interest rates, consumers are sensing the risk that this era is nearing an end. Many older mortgage deals are expiring this autumn which will mean moving on to more expensive standard variable rates,” said John Bagshaw, corporate services director of Connells Survey & Valuation.
“As a result, home owners on these deals are opting to refinance, taking advantage of the intense competition in the mortgage market right now.”
The figures themselves, however, are not the whole story. Owners of larger properties are also choosing to lock into long term fixed-rate mortgages – not because they do not want to move – but because under current government legislation, the stamp duty bill associated with the sale of their house means that they would be financially penalised for attempting a sale.
On the opposite end of the scale, the ratio of first-time buyers attempting to sell or remortgage has remained the same. Industry experts believe this is due to the ever-widening margin between rising house prices and low wages, which prevents them from purchasing more expensive properties – further stifling the market.
Those who need to sell, therefore, have been left in a precarious situation with a choice between staying put, or risking a loss on the asking price of their home. While they still have the option of using property buying companies, the outlook for sellers in the near-future is looking decidedly grim.
Worried that your house is unsellable? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.