In December, the Bank of England’s Monetary Policy Committee (MPC) surprisingly raised the standard base interest rate from the hundreds of years low level of 0.1% to 0.25%. While still low, the interest rate more than doubled. Lenders quickly followed with changes in their offerings in lending. Homeowners that had been waiting to take action, and home buyers forced by high demand to wait out their choices in the housing market missed out on the best offerings in remortgages and mortgages. There had been an expectation of the first rate hike to come in the start of the new year, and while December was a surprise, the warnings are clear that another hike is likely in February.

Inflation is growing rapidly and the MPC is under pressure to hike the rate set by the Bank in the hopes of slowing its ascending rate into levels not seen in decades. There was not an MPC meeting in January, and the next meeting is 3 February. There are very few experts that are anticipating a hold on another rate hike in the upcoming vote, rather the forecasts calls for another rate hike and possibly more to follow.

This should be a concern for borrowers, especially those holding large value loans, such as mortgages. The usual norm of more than a decade is to see offerings of very low interest rates. Borrowing has been cheap, but that could be coming to an end.

For homeowners that allowed their mortgage term to end without a remortgage and were moved to their lender’s standard variable rate (SVR), the warnings about rate hikes should be received as loud shouts to take notice. Since SVR’s are risky of a sudden change, and can usually be at rates higher than what is available with a remortgage, a homeowner could quickly be forced to pay more, and be pushed to rush to remortgage with more rate hikes.

There are still very attractive remortgage deals available, and while the MPC meeting is right around the corner, it could prove advantageous to homeowners to start shopping for a remortgage very soon. Doing so online is quick and easy, and by shopping with a remortgage broker rather than going website to website of lenders, a homeowner could get various quotes from different lenders in one stop shopping. 

Experts encourage all homeowners to shop for a remortgage. Whether a homeowner has allowed their mortgage term to end and are now on a SVR, or they are close to having their term end, it could be helpful to start seeking out a remortgage soon. By choosing a fixed interest rate remortgage, the homeowner could gain a safety net against rising rates by locking in a low rate now.

Even those not close to having their mortgage term end could consider if paying penalty fees for ending their deal early could be a good strategy. In doing so, they could secure a low interest rate available now than what would possibly be available when their mortgage term is due to end, such as perhaps in a year or two when rates could be nearing higher levels not seen in over a decade.

The MPC meeting is likely to result in another rate hike, and how much is unsure, but some estimate it could be another doubling of the current rate to 0.5% or perhaps even higher such as 0.75%. Considering what the rates were all of last year, and before, those levels, while still low mean paying more than necessary when compared with what is available in remortgages and mortgage offers today.