There are over a million homeowners expected to come to the end of their mortgage term this year. For those with two-year fixed rate deals expiring, the financial sting of losing out on their current rate could hurt deeply. In 2022, rates were much more affordable as they were on the rise from the lowest base rate recorded in over 300 years. In January 2022, the rate was 0.25% having increased the previous month from the historic low of 0.1%. By April 2022, the base rate was 0.75%. The current standard base rate set by the Bank of England’s Monetary Policy Committee (MPC) is 5.25%.

Borrowing is expensive currently in comparison to 2022. Affordability is an issue with hopeful home buyers and homeowners due to the higher cost of borrowing. While home buyers can wait out the lending market and economy for lower rates, homeowners with expiring mortgage terms must face the current interest rates.

At the end of a mortgage term, the homeowner could remortgage, or they will be transitioned to their lender’s standard variable rate (SVR). Experts encourage homeowners to avoid a SVR for it is usually higher than the rate found with a remortgage, it is variable and therefore subject to changes, and is considered risky for those preferring a constant monthly repayment amount and risky for those not able to quickly absorb an increase should the lender choose to raise its SVR with little notice.

Because remortgaging is the preferred choice for homeowners, it is encouraged by experts to shop online for a remortgage sooner rather than later. The lending market has been competitive in recent months, and while that is easing, there are still many attractive deals available. While they do not mirror the rate choices of 2022, avoiding a SVR is preferred. 

However, there may be homeowners opting to move onto a SVR rather than choose a remortgage because they believe rates could change soon. They are playing a wait and see strategy. Allowing one’s loan to be moved to a SVR and paying more than necessary is not likely the best strategy. 

The difference in paying on a SVR or with a remortgage could be vast. It would involve paying more each month as one waits for the MPC to cut rates and then awaiting a response from lenders. Each month paying more than necessary just in the hope that lender rates will be dramatically different than now and make it worth the extra paid money might be a poor financial decision. 

It is unlikely the homeowner would later reap a level of savings to cancel out the extra expenses of each month being on a SVR.

The forecasts have fluctuated from there being two or possibly three rate cuts this year. While inflation has declined to 3.2%, down from 3.4% last month, it still fell short of the expected 3.1% experts had forecasted. This could push off the number of cuts for the year and push them further out rather than an early cut occurring.

The earliest MPC rate cut had been forecasted for the start of summer, others were for the first rate cut to happen in August. Homeowners coming to the end of their rate later in the year could wait as they would still be on their current mortgage term and rate, those coming to the end of their deal earlier or even those already on a SVR might want to consider remortgaging. While rate cuts could happen, they won’t take rates down to lows of two years ago.

The expected rate cuts are likely to be minimal to help keep inflation under control as it nears the target level of 2.0%. If the cuts are 0.25% and three occur the base rate would be 4.50%, only two would leave the rate at 4.75%. Either way, higher than in 2022, and lender rates would likely be near to what is available now.

Homeowners can easily access what deals are offered to them by shopping for a remortgage online. Visiting the website of a remortgage broker could provide numerous quotes from a variety of lenders. Brokers also could offer exclusive deals. Homeowners could also visit lender websites to gather quotes one by one. Reviewing and comparing quotes will help a homeowner determine savings opportunities over a SVR and help them prepare ahead of what to expect in new payments.

Coming to the end of a mortgage term requires choices, gathering information so as to plan the best savings for financial security is possible by shopping for a remortgage online. Waiting out might be a choice some will make, but determining the cost of doing so over the savings possible is helped by gathering remortgage quotes. It is easy and fast, and the quotes obtained could be used to help one make the most of current lender rates and perhaps prepare for ones to come.