The next meeting of the Bank of England’s Monetary Policy Committee (MPC) will be held on 22 June 2023. The forecast is for yet another rate hike as inflation has remained stubbornly high despite the previous twelve consecutive rate increases so far. During the May meeting, the base rate was increased from 4.25% to 4.5%. The 0.25% increase was the slow and steady choice made during many of the past hikes to the standard base rate. However, since inflation remained far above the target rate of 2.0% at 8.7% down from the 10.1% reported in March, there could be a 0.50% hike at this month’s MPC meeting.

Unfortunately, in a matter of a week, things have changed drastically for homeowners that were playing the waiting game on whether or not to remortgage. Those that took action rather than risk higher rates likely obtained an interest rate that has already disappeared. Due to the less than expected adjustment to the inflation rate, lenders last week began to pull their best mortgage and remortgage offers and are replacing them with higher rates. Some products are at rates almost a full percentage point than offered the prior week. Borrowing has once again become more expensive.

The need for a remortgage has been repeated by experts for over a year now. Those that waited out the warning are paying more money than if they had listened to the advice earlier. The reason is that borrowing is much more expensive than it was only a little over a year ago. Those with debt subject to rising interest rates are having difficulty adjusting their household budgets and while there are those hoping for the rates to bottom out again to make affordable rates more accessible, it is not likely to happen. If anything, the current rates will be disappearing soon, and higher ones are in our near future.

It was only a few weeks ago that there were unexpected favorable factors in the lending market for homeowners. Despite the Bank of England’s Monetary Policy Committee (MPC) hiking the standard base rate to 4.5%, many lenders held back from pulling their lowest interest rate deals and pushing offering rates higher. It was a competitive move by lenders to draw the attention of borrowers, but that opportunity may have passed. 

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.

According to recent data from the ONS, there are more than a million households that will be facing higher interest rates in 2023 as they come off their mortgage deals. Over half of those facing the end of their mortgage terms obtained fixed rate deals when lenders were offering historically low rates. The change in interest rates could have homeowners paying hundreds of more pounds per month when they move to current rates.