Homeowners are likely questioning whether to remortgage now or wait till next year when interest rates might be lower. The hope is to figure out which choice would offer the opportunity to secure a lower interest rate remortgage and save money. The answer is hard for some homeowners since rates now or next year would be higher than they have been paying. For instance, a homeowner may currently have a fixed rate that is lower than current rates and even lower than forecasted rates for next year. Also, forecasts are not always reliable and there is the possibility that the greater savings is choosing a deal now rather than waiting. For the homeowners coming to the end of their mortgage term with a lower rate than could be found with today’s rates, this has been an issue since 2022 for homeowners.

In 2020, the Bank of England’s standard base rate was reduced to almost zero at 0.1% due to the pandemic. Rates from lenders reached historical lows for their lending institution. This meant some borrowers were capable of obtaining the lowest borrowing rates ever offered and of course lower than seen in generations.

In December 2021, the base rate began a steep climb as the Monetary Policy Committee (MPC) increased the rate from 0.1% to more than double at 0.25%. Every MPC meeting from December 2021 until August 2023 resulted in a majority vote of the committee for an increase. The rate grew from 0.1% to 5.25%.

This resulted in financial shock for homeowners in need of a remortgage at the end of their fixed deal that had been obtained when it was attached to the lower pandemic impacted offers. Choosing not to remortgage would cause more financial stress for without a remortgage, lenders moved the loan to their standard variable rate or SVR.

The SVR is a variable type of loan which means rate hikes as the MPC voted for increases meeting after meeting. Also, a SVR could be double or more the rate available with a remortgage, which is why experts encourage homeowners to avoid a SVR. Even if a homeowner is considering waiting to choose a fixed rate remortgage for only a brief time period, there are better choices than a SVR.

The rate remained at 5.25% until August this year when the sixteen-year high base rate was voted to be reduced for the first time since March 2020. The MPC cut the rate from 5.25% to 5.0%. The committee voted to hold the rate steady in September, and it remained at 5.0% in October as there was not a meeting scheduled until November. 

This month the MPC voted for the second cut of the year, which took the base rate to 4.75%. This is the lowest the rate has been in 18 months.

Lenders have been in competition for the attention of borrowers since the forecast grew for the first rate cut of the year. Currently, there are mortgage, and remortgage deals available below 4.0%. Of course, the absolute best deals are reserved normally for those that have low loan to value or LTV ratios, however there are incredibly attractive deals being offered that might not be the lowest rate, but definitely worth considering.

Waiting until 2025 when rates might be lower could be a strategy for some homeowners, but the competitive market between lenders could come to a close and the lower remortgage deals currently available could begin to disappear. 

For those that are putting trust into forecasts, it should be noted that forecasts called for a rate cut in the first quarter of the year, then an early spring, late spring, and then summer. The first reduction was not voted on until August. If a homeowner had expected to pay more on a SVR for a brief time waiting on the forecast to materialize, they would have paid more than necessary.

Waiting or remortgaging now is difficult to advise, since every homeowner’s financial situation and needs are different. For the homeowner looking to find information that could be the most helpful, it is likely found in obtaining remortgage quotes. By gathering quotes, which is quick and easy to do online, a homeowner could discover what remortgage deals are available and determine if now is the time to get a remortgage deal or if taking the risk to wait until next year is warranted.