Homeowners considering a remortgage in the next few months and hopeful home buyers in search of a mortgage are sure to have heard the experts warning of an interest rate hike. The Bank of England is expected to adjust the interest rate to counter current inflation. The Monetary Policy Committee (MPC) has kept the standard base rate at 0.25 per cent since March 2009.

An increase in the rate would have many impacts besides combating the state of inflation. Homeowners on their lender’s standard variable rate (SVR) would likely find their repayment amounts increasing quickly with little time to remortgage, if any. This would put pressure on homeowners that have become accustomed to historically low rates. The rush to find a fixed rate at a low interest rate could be the highest demand in the lending market.

Home buyers would also feel the pressure to quickly grab a low interest rate deal. Unfortunately they have a problem in low supply within the housing market which means they would be pressured to find an adequate property as well as the mortgage before rates rise.

Experts believe the Bank of England could quickly respond with an interest rate change by the end of the year. The next meeting of the MPC will be in the first week of November, with no meeting in October. November will also be when the next inflation report is released. In the last meeting held in the start of September, the committee voted 7-2 to keep the rate steady.

The minutes of the September meeting reported, “A majority of MPC members judge that, if the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure ... some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target.”