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Homeowner Strategy to Save Money with Remortgage is Simple as Shopping Online

Homeowner Strategy to Save Money with Remortgage is Simple as Shopping Online

Borrowing has become more expensive in a relatively short period. In December 2021, the Bank of England’s Monetary Policy Committee (MPC) began the first of what would become twelve consecutive rate hikes. The Bank’s standard base rate then was almost zero at 0.1% and today the base rate is 4.5%, which is the highest level since 2008. Unfortunately, it is not likely to stay at this level much longer as the next MPC meeting is set for 22 June and experts believe another increase is likely.

Inflation remains an important issue and the MPC is acting against it by raising interest rates. There had been a forecast for the peak rate to be 4.8%, but the latest report on inflation, which remains at 8.7%, has pushed the forecast upward to expect a peak rate of 5.5%.

This expectation of more expensive borrowing aligning with a large number of homeowners coming to the end of their mortgage terms is creating a strong demand for remortgaging. Homeowners are seeking the ability to use a remortgage to their advantage and not only save money but escape further rate hikes that could persist beyond expectations if inflation remains stubborn.

 Lenders have been increasing their rate offerings following a restraint to do so after the last MPC meeting. Despite the MPC meeting in May resulting in a rate hike of 0.25%, many lenders kept their products on the market and did not rush to remove them to issue new ones with higher rates. It made the market more competitive and benefited borrowers, both home buyers and homeowners alike.

However, the recent report on inflation was less favorable than expected. It did move out of double digits to 8.7% from 10.1%, but it remains more than four times the target rate of 2.0%. Lenders then decided to lower their lending risks and began to remove their lowest interest rate products and replaced them with higher interest rate deals.

Many homeowners missed out by stalling and are now facing higher rates. There seems to be those that believe if they wait out inflation they will see rates decline, and they might slightly depending on how much they are increased in the months to come, but there is little hope in rates returning to the historic lows available less than two years ago due to the pandemic.

Rather than pay more than necessary and putting hope into a return of almost free borrowing, homeowners should take on a strategy to save now. 

When a homeowner comes to the end of their mortgage term, which many will do this year, they will have the choice to either remortgage or allow their lender to move their loan to their standard variable rate (SVR). For most, rejecting the SVR is the better choice. A SVR is usually attached to a rate that is double or more what could be found with a remortgage. Also, the key word of the SVR is variable which means the homeowner could see their repayments increase should the MPC hike the rate further or the lender decide an increase to their SVR is necessary.

A remortgage could not only have the lower interest rate but allow for a fixed rate choice which would lock in the lower rate and shield the homeowner’s budget from further rate increases which are forecasted to fight inflation.

To be a part of the many homeowners expected to rush to remortgage as news of less favorable interest rates grows, one must simply shop for a deal online. Visiting the website of a remortgage broker could be a one-stop shopping experience. Quotes from numerous remortgage lenders could be obtained to review and compare. Brokers also could have exclusive deals from lenders that are not offered directly from the lender to borrowers. Gathering quotes could also be done by visiting individual remortgage lender websites.

Once quotes are in hand, the homeowner can easily compare remortgage deals and discover the best remortgage. As mentioned, some homeowners might be interested in remortgage deals that offer a fixed rate, while others might be more interested in an equity cash release to put money into the homeowner’s hands for personal needs. 

There are unique offers to suit the individual needs of homeowners of which saving money is likely the priority after long enduring double-digit inflation, higher energy costs, and the global pandemic. However, there are other benefits to be sought as well and if homeowners are unsure as to how to proceed or choose the best remortgage, taking time to be educated as to the different types of remortgage products is easily done on most websites of remortgage brokers or lenders. There is always the opportunity to seek out the help of remortgage experts if needed.

It should be noted that homeowners serious about obtaining a remortgage might want to be aware that the current strong demand in the lending market could slow down the process of obtaining a deal. Also, further changes in the market are possible, even before the next MPC meeting. Therefore, homeowners are encouraged to shop sooner rather than later.

In addition, consideration should be given to the possible changes to current rates due to the 22 June MPC meeting. There will not be a meeting in July, with the next one scheduled for August. The MPC members could decide to make a more aggressive move against inflation to make an impact from June until the next meeting. The base rate could increase to either 4.75% or as much as 5.0% or higher.

Demand in the remortgage lending market is expected to grow as homeowners seek to implement the strategy to save money and perhaps peace of mind with a fixed rate deal. Being part of those that do so can begin by simply shopping for a deal online.

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