Losing home buyers from the housing market would do more than just harm the goals of property sellers. The economy is strongly dependent on the UK housing market, and on a more personal level, so are homeowners, but not because they have become home sellers. Homeowners depend on their property values to obtain access to remortgaging. The better their ratio of loan to value, the less risk of the lender and the better remortgage deals available to the homeowner. Unfortunately, the forecast is for the current interest rates to keep homeowners away from the housing market, but according to Nationwide they are leaving slowly, if at all.

There is no doubt that a remortgage could be quite helpful to a homeowner in the current economic environment. This is especially so for those homeowners coming to the end of their mortgage term. Without a remortgage, they will be moved to their lender’s standard variable rate (SVR) and that interest rate could be double or more the level offered with a remortgage. Also, a SVR would put the homeowner at risk of rising rates while a fixed rate remortgage could shield the homeowner from any further rate hikes, and there are certainly more rate hikes expected in the months ahead.

There are many reasons homeowners should be considering a remortgage. One of course is to save money. Another is to secure a fixed rate and escape future rate hikes. Some homeowners could be considering an equity cash release while others could be considering a new deal to get peace of mind from higher rates or secure a deal before house prices possibly decline. Now that the Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate for the thirteenth consecutive time, remortgaging should be a consideration for all homeowners.

On Thursday, the Bank of England’s Monetary Policy Committee (MPC) met, and the result was the thirteenth consecutive meeting in which a rate increase occurred. It was not only another increase, but a larger one than what some experts had forecasted. The rate was moved by a 0.5% increase to 5.0%. Much of the reasoning behind the larger than expected rate increase is due to there not being a meeting in July in which the MPC could react to inflation. It has remained stubbornly high and despite the recent rate hikes, inflation remained steady from April to May.

In a less than favorable report, this morning, the Office of National Statistics (ONS) released the data on inflation. The Consumer Prices Index (CPI) had been expected to drop to at least 8.4%, but it remained at 8.7% for May, the same as was reported in April. While inflation has dropped from the peak level of 11.1% reported in October 2022, it remains over four times the target rate of 2.0% set by the Bank of England. The higher than expected inflation level adds more pressure to the Monetary Policy Committee (MPC) as they seek to balance the threat of inflation and the financial woes of households facing higher mortgage payments.

While there has been much made of lenders quickly increasing their offering interest rates prior to this week’s meeting of the Bank of England’s Monetary Policy Committee (MPC), it doesn’t mean there are not attractive deals still to discover and savings to be had. Two-year UK mortgages have been put on the lending market above 6.0%. In yet another indication of what is in store for homeowners, the UK two-year gilts passed 5.0% ahead of the MPC meeting, which could mean remortgage rates would rise even further.