Borrowers are again being warned, and this time more loudly, that change is coming in the lending market. Not only are lenders raising rates, even before the Bank of England’s Monetary Policy Committee (MPC) meets on the 22 June, but also pulling products making for a less competitive market for borrowers. Homeowners and home buyers will find they have fewer choices, and that interest rates of only a few weeks ago are gone. In some cases, lenders have chosen to pause any new applications in response to the higher risk of lending due to the current economic climate.

Homeowners should be on alert due to the warnings. Experts are forecasting more interest rate hikes than had been expected in the first part of the year. The peak rate forecast has risen from 4.8% to a possible 5.5% by the end of the year to combat inflation. The current standard base interest rate of the Bank of England is at 4.5%, therefore the peak forecast alludes to several rate hikes in the very near future.

The MPC meeting on the 22nd of this month has an expectation in polls of 100% likelihood of another increase. If the committee votes as they did last month for another 0.25% increase, the rate will go to another high in over a decade, taking the rate to 4.75%. It should be noted that the rate was at almost zero at 0.1% less than two years ago.

It was in December 2021 the first of twelve consecutive MPC meetings resulted in a rate hike. Inflation, while coming down from double digits, declined from the previous 10.1% to 8.7%. It was less of a correction toward the Bank’s target rate of 2.0% and the expectation of further and perhaps more aggressive rate hikes pushed lenders to react to their rising risk in lending. Products have been pulled, the lowest rate offerings disappeared and were replaced, if at all, by higher rate offers. As mentioned, some lenders, like Santander, have temporarily paused lending applications for mortgages.

The expectation for perhaps a more aggressive interest rate increase against inflation cannot be ruled out. While the MPC is meeting on the 22nd, the next meeting will not be until August. If the MPC wishes to have a stronger hold against inflation in place during a standby month, they might choose to raise the rate by 0.50% which would take the rate to 5.0%. 

Homeowners coming to the end of their term could be facing affordability issues at that interest rate level. This could be especially so for those that obtained their current mortgage or remortgage when the Bank’s rate was at a historic low prior to December 2021. Thousands of homeowners will be coming to the end of their fixed rate deals in the last half of 2023 which were obtained when lenders were offering their own historic low interest rates. As their term expires so will their low interest rate and they will be facing a choice of rates that could be a shock to their household budget.

Not all is gloom and doom though. Remortgage brokers and remortgage lenders are at the ready to offer opportunities to find solutions to the current financial woes. 

A homeowner could remortgage and choose a fixed rate deal to lock in their current interest rate choice. Doing so would save their budget from further rate hikes, which as mentioned could be happening soon.

Also, by choosing a remortgage, the homeowner will avoid being moved to the lender’s standard variable rate (SVR) at the end of their term. A SVR could be double or more the rate level offered with a remortgage. By avoiding the SVR more savings could be found.

Other opportunities in remortgaging could come from an equity cash release remortgage. Built up equity could be turned into cash for the homeowner to use as needed while they also secure a new interest rate and fixed deal.

Through a new deal by extending the homeowner’s mortgage debt into a longer length of time to repay the debt, the remortgage lender could lower their monthly repayment amounts. 

There are many benefits to be found with a remortgage and the sooner a homeowner makes it a priority to find those benefits perhaps the better off they will be as conditions in lending continue to change.

It is easy to shop for a remortgage quote online. It is a non-obligatory opportunity to see what quotes would be offered to the homeowner from a lender. Shopping online with a remortgage broker is an easy and quick way to obtain many quotes from a variety of lenders and because brokers often have exclusive deals they should not be overlooked as a source of quotes. Homeowners could also go from lender website to lender website to gather quotes to review and compare.

Lending is tightening, and while offered lending rates are likely to increase in just a matter of days, seeking an opportunity or perhaps several opportunities to save money is a smart strategy. Due to the ease and quickness of shopping for a remortgage online, it is certainly an easy solution that could offer financial relief and peace of mind for the days ahead for any homeowner.