In the next year, almost two million households with fixed rate deals will come to the end of their mortgage terms. According to UK Finance, 1.8 million fixed rate deals are due to expire in 2023. The homeowners will then be able to choose from a remortgage or if not, be moved to their lender’s standard variable rate (SVR). A SVR is typically attached to a rate higher than what is offered with a remortgage, and it is subject to increases when rates are rising. Rather than face a higher rate or further hikes, a fixed rate remortgage could offer relief.

According to a report from Moneyfacts, a two-year mortgage average for a £200,000 in December 2021 resulted in a repayment of £881 per month. Due to higher interest rates, the same value mortgage would result in a monthly repayment of £1,269. This equates to £4,656 more per year, or £9,312 more over the course of a two-year deal.

The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate during each meeting from December 2021 through December 2022. Before the MPC meeting last December, the base rate was almost zero at 0.1%. It was raised to 0.25%, and then further increases during each meeting in 2022. Now the base rate sits at 3.5%.

The forecast is for the MPC to raise the rate higher during 2023. It is possible the rate will eventually reach 4.5% to control inflation. It should not be assumed that should inflation begin to fall that interest rates will return to their historic lows. The rates offered will likely stay and not decline into the record setting historic levels seen during the pandemic should all things remain as is or improve.

Homeowners choosing from rates now will likely have lower and therefore cheaper rates to choose from than in months to come. To avoid paying more, a remortgage could be shopped for as soon as possible.

It takes some time for a remortgage to complete and because the next meeting of the MPC is in February, homeowners are encouraged to shop for a remortgage now. It is simple and easy to do online. Visiting a remortgage lender to obtain a quote can be done in a matter of minutes. Going to more remortgage lender sites will offer more quotes to review and compare.

Homeowners also have the option of an easier shopping experience by visiting the website of a remortgage broker. They often have exclusive deals not offered by lenders directly to borrowers. By visiting a broker, the homeowner could get numerous quotes from a variety of lenders to compare and discover the best remortgage offers.

Homeowners are facing higher interest rates than what they were used to paying if their mortgage was obtained when the standard base rate by the Bank was at a historical low. However, the higher rates available now will still be lower than it might be if they wait to secure a rate later. 

It is time to prepare for higher repayments, but there are still savings to secure. A fixed rate remortgage would not only lock in the chosen interest rate for the length of the term and shield against further rate hikes, but it would also save from the likely higher interest rate cost of a SVR.

The MPC has increased the rate during the last nine consecutive months, and at 3.5% it is the highest it has been in 14 years. There are more hikes expected, and rather than pay more than necessary, experts encourage homeowners to shop for a remortgage. The information gathered with quotes will help them to discover what opportunities to save are available. 

Interest rate offers now will likely disappear and change with the next MPC meetings. The next two are scheduled for 2 February and 23 March. Experts encourage all homeowners to shop and take advantage of a remortgage, and there is no time to delay when savings could be found and paying more is the risk of doing nothing.