Analysts have been warning of an interest rate increase for almost half a year now and homeowners have heeded the warning and have been in demand of remortgages to help fight off the increase.  Of those that have sought out remortgages, despite being faced with better deals from a tracker loan they have chosen fixed rate remortgages in high numbers.  The fixed rate is considered safer and a better choice if rates are due to increase.

The fixed rate deals are not the only deal in town even though that has been what most homeowners have secured.  For the best rate a tracker remortgage is the choice.  It isn’t for every homeowner or every situation, but for those that take advantage of a tracker the rates available are very attractive right now since the demand is high for fixed rates.  The higher the equity on the loan the better the rate the homeowner can secure.

There are of course some homeowners that have not secured a remortgage and are sitting on their lender’s variable interest rate.  Currently they are enjoying a very affordable rate with the Bank’s standard base rate sitting at 0.5 per cent.  Thinking that either a rate increase is far off or that the impact of a rate change will be slight they are holding out.  Yet, it could come as a real shock once the rise happens.  According to the calculations of some experts only a slight increase in the rate could send an average mortgage payment to £100 more per month. 

Even though a variable rate may be affordable now, when the rate increases it will be difficult for most homeowners to pay their mortgage.  Seeking a remortgage now would lower the risk of an increase.  Whether a tracker or a fixed rate remortgage, lenders have good deals on the market and once the increase occurs those deals will disappear.