Brexit was followed by a global pandemic, and lockdowns. There was financial stress and unknowns with the pandemic, and for many there were deep personal stresses. As we emerged from the pandemic, there were supply chain issues that caused difficulties that would have to be endured. Next inflation started, and it grew and took more from household budgets that had already been strained for years. Perhaps, the only good financial outcome in the past few years was the historically low interest rates. The cheap rates brought about the possibility of homeownership for many, an upgrade to a dream house for others, and a large profit from a home sale to cushion a homeowner’s senior years as they downgraded and sold their home for a price unexpected by experts in the middle of a pandemic.

Now the once good and helpful thing for home buyers that secured an historically low interest rate has evolved into a nightmare. Those that secured their two-year fixed rate mortgage and have already or will come to the end of their term this year will be leaving behind the most affordable interest rates in generations to face the highest interest rates in over a decade. Unfortunately, the interest rates forecasted to become even more expensive in the months ahead.

The Bank of England’s Monetary Policy Committee (MPC) has been fighting back inflation since December 2021. The MPC meeting that month increased the standard base interest rate from the historic low of 0.1% to 0.25%. The then doubling of the base rate was a concern and a warning for homeowners. Fast forward to the June 2023 MPC meeting and the rate was increased by a surprising 0.50% to 5.0% with warnings the peak rate could reach above 6.0%.

For those homeowners that have been shielded from the rate hikes due to their fixed rate deal and have been paying on a rate from before the MPC began fighting inflation with rate increases, there is urgency to prepare or end up paying more than necessary.

Experts are worried homeowners could be facing affordability issues. Some might be facing repossession. While there are calls for financial relief for homeowners facing such issues, the government is not likely to step in or inflation could stubbornly stick around for longer and force rates even higher. 

Homeowners should take the steps experts are encouraging them to take rather than waiting and hoping for things to change. The first being to become more acquainted with their current mortgage. Know when the term will expire, the rate of the loan, and what kind of loan it is. With that information, the homeowner can make important decisions. 

If the loan is a type subject to increases, a remortgage could lock in a rate and avoid rising repayments. If the term has ended already or is within six months of doing so, a remortgage is highly encouraged. Without a remortgage, the homeowner is moved to their lender’s standard variable rate (SVR) when their term expires. A SVR is subject to rate hikes and will increase the repayments for a homeowner when the lender chooses to increase the rate, either in response to the MPC decisions or to global lending costs or other factors. Not only is a SVR risky due to the ability of it quickly changing to a higher level, but it is normally higher than what could be found with a remortgage. It actually could be double or more the rate found with a remortgage. 

A remortgage choice could not only offer a lower interest rate than a SVR, but also the ability to choose a fixed rate to protect the household budget from further increases. 

There are other benefits to a remortgage that will make it an even smarter strategy, such as securing a longer term to allow the economy to balance itself out from inflation and perhaps end during a time when rates will be more affordable, or the household income is better prepared to face higher rates.

Homeowners could also cash out their built-up equity and with the money consolidate debt, build an emergency cash fund, pay for a much needed expense or fund a put off family holiday. Some homeowners use the opportunity to upgrade and improve their home or property to save money with an energy efficient heating and cooling system or increase the lifestyle value of their space. Others have used the funds to turn part of their home into a rental area to bring income into their budget and provide housing while there is great demand for rentals.

Saving money and shielding against further rate hikes is the priority of homeowners seeking a remortgage, but homeowners could find there are other benefits as well.

To discover what opportunities are available, a homeowner can have quotes to review and compare in minutes by remortgage shopping online. Visiting the website of a remortgage broker could not only result in an exclusive deal from a lender not offered directly to borrowers, but with brokers there could also be numerous quotes from a variety of lenders to compare. Homeowners could also go from website to website of remortgage lenders to gather quotes.

The time to shop for a remortgage is now. Not only for those that are already on a SVR, those with unfavorable loan types when rates are increasing, and those soon to have their mortgage term end, but also those that would do well to prepare for the future. Knowing what is available now, what obstacles could be holding back the homeowner from getting the best remortgage offers or being denied could allow time to make changes to bring about a more favorable outcome.

Perhaps, the best advice for homeowners seeing their situation quickly spiral is to seek immediate help from their current lender. The current lender might not offer the lowest remortgage deal to be found or even the best one for the homeowner, but those in difficulty could benefit by seeking advice and assistance sooner rather than later and the help of the current lender might be the only and best help available. 

Inflation is far from reaching the target rate and therefore more rate hikes are expected. The target rate set by the Bank is 2.0% and inflation was last reported at 8.7%. There are experts that due to the possibility of inflation growing because of wage increases are forecasting a longer road ahead of borrowers dealing with higher interest rates. The expectation for the next MPC meeting in August is for another 0.50% increase which will take the base rate to 5.5%. 

There is likely to be a rush to remortgage as homeowners take heed of the warnings that are now coming into reality. Inflation is proving to be stubborn, so prices will remain high for the time being. Interest rates are higher than they have been in over a decade, and they will increase rather than decline. Also, there should be no putting off shopping for a remortgage. Demand is growing and the rush to grab a deal could put a homeowner into a situation of finding it difficult to meet repayments and push their opportunity to remortgage away as they move through the process.

There is no time to waste. The first step is to become familiar with the current mortgage and then sit down and shop for a remortgage rather than miss out on the opportunities within reach that could make all the difference in surviving the higher rates or falling victim to them.