In yet another reason for homeowners to seek a remortgage to possibly give relief to their household budget, the UIK is now forecasted to hit an inflation level of 18% in early 2023. This forecast comes from the US financial group Citi. The Bank of England has forecasted inflation to reach 15% early next year. Perhaps it matters not the level of inflation, but the fact that it is forecasted to keep rising. The impact could serve a greater hit on households due to the already expected higher cost of energy this winter.

There is little to be done individually to counteract the level of inflation. It is what it is and everyone will be paying more for practically everything compared to this same time last year. 

If inflation does reach as high as 18%, it will signal significant economic hardships. It will mirror the last time inflation reached the same level which was in 1976. The energy crisis of that time caused issue across the globe as countries sought to deal with the high costs and low supplies of energy sources, namely petrol, oil, and natural gas.

With soaring inflation forecasts, it will stand to reason that the Bank of England’s Monetary Policy Committee (MPC) will be forced to take aggressive action to tackle the issue. This month the MPC meeting resulted in a larger interest rate increase than seen in 27 years. The 0.50% hike pushed the standard base rate to 1.75%.

The next meeting is in September where another rate increase is expected. There is not a meeting scheduled for October. This could result in the MPC majority voting for another large rate hike to sit in place until the next scheduled meeting in November.

If the rate is increased again by 0.50%, it would put the base rate at over 2.0% to 2.25%. Lender offerings would present even higher and at that level it could shock many homeowner households. 

Considering those that obtained two-year mortgages during the start of the pandemic lockdowns will be nearing the end of their term, they will go from interest rate offerings that were at historical lows to levels not seen in several decades. 

Rather than pay more than necessary, homeowners are encouraged to shop for a remortgage as soon as possible. Waiting could prove to be a very bad strategic move. Rates are not likely to drop in the next year as the UK deals with inflation. Rates are not likely to steady either. Increases are more likely and that means homeowners will be paying more if they don’t remortgage soon.

Allowing a mortgage term to end and being moved to the lender’s standard variable rate (SVR) is considered a risky move. Not only does it put the homeowner at risk for increases each time the MPC votes for a hike, a SVR could involve increases much larger than expected. The only way to escape increases from a SVR is to remortgage. 

Staying on a SVR is not the best choice when interest rates are rising. No one should want to pay more or be in the position to rush for a remortgage when the repayment becomes a significant financial strain. Remortgaging in a rush could prove very stressful and perhaps even impossible in some cases.

Currently remortgage lenders are still offering attractive deals. In consideration that the deals available today are likely to disappear with the next MPC meeting in the middle of September, they look even more attractive.

Of course, homeowners already at the end of their mortgage term and moved to the lender’s SVR are encouraged to shop for a remortgage. In fact, all homeowners are encouraged by experts to at least consider shopping for one. The information gained from quotes could help in discovering a smart strategy to save money, lock in a current rate for the length of their term, and it could even offer peace of mind from the stress of worrying about the rate increases that are sure to happen as the Bank deals with inflation into next year.

Shopping online for a remortgage is quick and easy. In just a few clicks, a homeowner could visit a remortgage lender site and have a quote in hand. Then they can go to another lender site and another. It really is fast and easy. They could also visit a remortgage broker site and get numerous quotes from various vendors in a one-stop shopping experience. Homeowners could also discover an exclusive broker deal from a top lender they couldn’t find if visiting the lender’s site directly.

Rather than face paying more when saving money is so important, homeowners could in only a few minutes have information in hand of how to save money now, save against rising rates, and for some homeowners have money in hand with an equity cash release remortgage. 

The next meetings of the MPC are 15 September and 3 November. There is no time like the present to prepare and take advantage of opportunities to give relief to a household budget, and for homeowners shopping for a remortgage is a good first step.