Homeowners are likely to find substantial savings if they shop for a remortgage now. Waiting on the decision of the Bank of England’s Monetary Policy Committee (MPC) to cut the standard base interest rate is not necessary to find lower interest rates. Lenders have been confident that a rate cut is nearing and have lowered their interest rate offers over the last few weeks. Recently, Nationwide lowered rates below 4% on mortgages while the Bank’s base rate remains at 5.25%. Remortgage rates are not as low but are nearing the same threshold.

Nicholas Mendes, John Charcol’s mortgage technical manager, remarked, “Nationwide is the first lender to finally breach the 4% benchmark following recent weeks of downward repricing. This is fantastic news for borrowers and signifies a significant change in the mortgage landscape after recent months of increased rates.

“This rate is for purchases only. Those remortgaging will need to wait a bit longer before we see rates below 4% as well. We will likely see the likes of HSBC look to reprice again to ensure they remain ahead of the pack, potentially resulting in another quick reprice from them.

“Lenders have been busy competitively repricing against each other over the last fortnight, with purchase rates significantly lower than remortgage rates. Purchase rates are highly competitive compared to market pricing. Expect the biggest future reductions to be in remortgage rates, as they still have room to decrease, and any significant reductions are expected in this area.”

Remortgage offers from Nationwide included their 5-year fixed rate at 60% LTV with a £1,499 fee lowered to 4.27%, and the 2-year fixed rate at 75% LTV with a £999 fee is 4.79%.

While the lowest cheapest rates are reserved for lower LTVs and normally have higher fees, borrowers with higher LTVs will find competitive rates on the lending market as well, and perhaps lower fees. Lenders are competitive and bringing attractive deals to grab the attention of the many borrowers seeking the best interest rate deals to help them save money.

The last meeting of the MPC was held in June, with the next meeting is scheduled for 1 August. There have been two reports, released in June and July, showing inflation has leveled at 2.0%, the target rate set by the Bank. This has added confidence the MPC will soon offer the first rate cut since March 2020.

If the MPC is bothered by certain economic sectors still experiencing higher than hoped for inflation, such as the service sector, they may hold off a rate cut until September. Service inflation was forecasted to drop to 5.1% but remained at 5.7% as reported in the data released in June for the twelve months to May. If it remains stubborn, the MPC could decide to hold off on the forecasted rate cut, but if they do, lenders are not expected pull their now offered deals. However, that could be a hopeful expectation. 

To take advantage of the current interest rates, borrowers are encouraged to do so now. Hopeful home buyers should indeed take a look at the mortgage deals now, because despite the expectation for the MPC to lower the base rate, it will not likely be dropped to a level equal to the current mortgage rates. The first cut is forecasted to be 0.25% taking the base rate to 5.0%. A cautious vote for a low rate cut offers stability and less risk of inflation growing rather than staying at target. 

Homeowners, too, should shop for their own deal now. Remortgage shopping is easy and quick to do online. Visiting the website of a remortgage broker allows the homeowner to gather numerous quotes from a variety of lenders. There could even be exclusive deals from lenders offered only through brokers. Homeowners could also go from lender website to website to gather quotes. Reviewing and comparing remortgage quotes will allow homeowners to choose the best remortgage deal for their own needs.

The competitive lending market developing now due to the confidence in a lower base rate offers unique opportunities and benefits for borrowers. The rates available now reflect even better than expected lender rates to follow a MPC base rate cut. Therefore, shopping offers now could bring about the best deals without waiting for the next MPC meeting or perhaps the next.