As expected, today the Bank of England’s Monetary Policy Committee (MPC) met and voted to keep the standard base interest rate at the 16-year high of 5.25%. Their decision is based on the fact the current report on inflation reveals it at 3.2%. The expectation is for inflation to decline in the next report much closer to the target rate of 2.0%. Had the MPC meeting come after the May update on inflation, perhaps a cut might have occurred if indeed it does drop nearer to target. The MPC had to vote according to the information at hand versus the expected inflation data that will be available on 22 May. 

The minutes of the last meeting of the MPC, held in March, revealed one member voted for a cut to the base rate of 0.25%. This was the first time in two years a vote was offered for a cut to the rate. The May meeting resulted in one more member voting for a cut, and the majority (7-2) voting to keep the rate steady.

The inflation report will be released two times before the next MPC meeting, on 22 May and on 19 June, with the next MPC gathering scheduled for 20 June. There had been a strong expectation for a rate cut in June, but that has been moved to a possibility in August. However, should the next two reports on inflation be favorable, the MPC might offer some relief to borrowers with a slight cut in June of 0.25%.

The meeting was the sixth consecutive to hold the rate. Keeping the rate steady would be an important strategy to keep inflation moving toward the target rate. Cutting the rate without having this month’s inflation data would be a move based on expectation and the MPC is determined to remove the grip of inflation on the UK economy.

The governor of the Bank of England, Andrew Bailey, noted optimism in the economy and remarked on today’s vote, saying, “We’ve had encouraging news on inflation, and we think it will fall close to our 2% target in the next couple of months.

“We need to see more evidence that inflation will stay low before we can cut interest rates. I’m optimistic that things are moving in the right direction.”

Planning for a June or August cut to the base rate will be on the minds of borrowers, especially homeowners coming to the end of their current mortgage term. Experts encourage homeowners to avoid the temptation to wait out for lower rates. Doing so would mean that when their term ends without a remortgage choice, they will be transitioned to the lender’s standard variable rate (SVR) which usually has a much higher interest rate than what could be found with a remortgage. 

Waiting for a deep cut in lender rates while paying much more than necessary could have the homeowner losing out on savings. Rather than be burdened on a SVR with higher repayments, the homeowner should consider that if a rate cut does happen in June or more likely August, the cut to the base rate will be minimal. Taking into consideration there are incredibly attractive remortgages on the market now, getting a deal to pay less than a SVR could overall be the smarter choice.

Those with time to spare before their deal ends could gather information to plan ahead.

Determining what remortgage offers are available is easy to do by shopping online. Visiting the website of a remortgage broker could offer many quotes from a variety of lenders in a matter of minutes. Brokers could also offer exclusive deals not offered directly from lenders to borrowers. Gathering quotes is also possible by going from one remortgage lender website to another.

Once quotes are available to the homeowner, they can then review and compare them. It should be noted that experts encourage borrowers to not focus only on the lowest rate deals. The lower the rate, the higher the fees attached to the deal. Taking into consideration the savings of a lower interest rate along with the cost of any fees or services with the remortgage will reveal the true savings of the remortgage offer.

Unfortunately, homeowners will not be choosing from interest rates of only a few years ago. For instance, homeowners with two-year fixed rate deals from 2022 ending this year had much lower interest rate offers to shop through than now. The base rate in May 2022 was voted to 1.0%, an increase over the previous rate of 0.75%. Lender rates connected to a base rate of 1.0% are much lower than those connected to a base rate of 5.25%.

While homeowners might not be able to find a remortgage reflective of those in 2022, a remortgage in 2024 is still likely to be substantially more affordable than a SVR. Since shopping online for remortgage quotes is simple and fast, it is easy to gather the information to plan a strategy to make the most of opportunities in remortgaging to save.