The interest rate set by the Bank’s regulators has sat at its low level for more than two years making borrowing cheaper than it has been since World War II.  Once the rate begins to raise, the first hurdle of making the first increase, most analysts think many more will follow.  The reason is because inflation still remains above double of the intended target rate of 2.0 per cent.  Currently inflation sits at 4.5 per cent and experts expect it to rise to 5.0 per cent over the next few months.

With inflation outdoing wage increases, analysts have revealed that the average household in the UK is worse off by almost £1,000 and for many that amount could be much worse.  The majority of the Bank of England’s Monetary Policy Committee members believe that the rate does not have to increase for there to be a reverse in the inflation rate.  Instead, they believe that public spending cuts and higher taxes will impact the inflation rate and rein it in, and push it downward.  However, forecasts are calling for there to be a hike in the standard base interest rate in August.  How close the MPC was to changing the rate in June will be known when the MPC minutes from their meeting are released on June 22.

It is inevitable that the interest rate will increase at some time.  When it does, even a slight increase is expected to hit many households hard as far as their mortgage.  Experts suggest that homeowners get familiar with their mortgage interest rate and terms and become more knowledgeable about how they will be affected when the rate hike occurs.  Knowing so will help a homeowner decide if a remortgage to secure a low rate is important in securing their financial health for the future.  Once the interest rate increases, remortgage deals available now will be gone.