The Bank of England’s Monetary Policy Committee (MPC) met on Thursday to determine if their efforts to tame inflation have been good enough to let the rate stay steady. Not all members wanted to keep the rate at the current 5.25%. The vote was 6-3 and those that voted against the steady rate wanted to increase the rate. The voting was absent of any member looking to cut the base rate. 

The MPC meeting minutes reported that the rate, which is at a 15-year high, would likely stay “sufficiently long” as inflation remains above target of 2.0%.

The governor of the Bank, Andrew Bailey, remarked that it was too soon to begin thinking about cutting the base rate, and was not ready to confirm that the current base rate was definitely at peak level.

The rate staying put should help lenders feel at ease concerning the risk of lending. The competitive environment has kept interest rates lower than expected with some offers below the base rate. This could give confidence to home buyers to stay in the housing market. It might also assure borrowers they should take action while rates are attractive rather than waiting for a cut to the rate that is not expected to come anytime soon.

This is especially so for homeowners due to come to the end of their mortgage term in the coming year. Only two years ago the most popular mortgage on the market was a two-year fixed rate mortgage. While the Bank’s rate had been rising with each consecutive MPC meeting, in 2022 the base rate as well as lender rates were much more affordable than now.

The homeowners coming to the end of their fixed rate mortgage in 2024 will have to leave behind their cheaper rate and choose among lender rates that could be much higher than they were paying prior.

To keep from paying more than necessary, homeowners are encouraged to shop for a remortgage rather than be moved to their lender’s standard variable rate (SVR) which is likely the more expensive rate. The difference in savings from choosing a remortgage over a SVR could be substantial.

Not only should homeowners coming to the end of their mortgage term shop for a remortgage in search of saving money, but so should those already on their lender’s SVR, homeowners with a tracker loan or even those with a fixed rate higher than what is available on the market. 

The search for a money saving remortgage is easy to do online. In a matter of minutes, a homeowner could have numerous remortgage quotes from a variety of lenders in hand to review and compare by visiting the website of a remortgage broker. Brokers could also have exclusive deals from lenders not offered directly to borrowers. Of course, visiting individual lender sites to gather quotes is another choice.

With quotes in hand, a homeowner could easily determine the best strategy. Most homeowners have the ability to remortgage six months prior to the expiration of their term without a penalty fee, but there are some homeowners that will consider a penalty to be worth the ability to remortgage at current rates. Some will seek a fixed rate deal to gain peace of mind against the chance of a rate hike in the months ahead.

While the rate has stayed put since it increased in August to 5.25%, prior to MPC voting to keep the rate steady in September the rate had increased during 14 consecutive MPC meetings beginning in December 2021. Despite the MPC looking to tame inflation, it grew to double digits and a 40 year high. 

It is due to inflation that borrowers, or soon to be borrowers, should take warning that there still remains a possibility current rates could disappear. Perhaps by a vote of the MPC during the next meeting which will be in February, or lenders might choose on their own to step back from the competitive arena. 

Homeowners interested in remortgaging have received a bit of a holiday gift in the rate staying steady, for it will likely keep lender rates lower and competitive for a bit, and at least the MPC won’t be making another choice until February. Of course, for those that could benefit from a remortgage, starting out 2024 with the strategy to save is possible, and the strategy might start simply with shopping for a new deal online.