Remortgages have been in high demand from homeowners as the economic situation led many analysts to forecast an interest rate increase most likely in May.  Homeowners heeded the warning and sought out remortgages.  Yet, May came and the rate remained unchanged at 0.5 per cent.  Most forecasts now call for an interest rate to occur in August.  Homeowners could become used to hearing warnings and consider those crying out that an increase is coming as the “boy who cried wolf” and fail to pay attention anymore.

It is important for homeowners to understand two things.  The analysts weren’t wrong.  There is an interest rate increase coming, it just is hard to determine “when” due to the economic recovery being hit by public spending cuts and higher VAT.  Jobless problems are compounding the problem as well as a lack in consumer confidence.  Now, there is a difference from months past and that is the economy is going to have the advantage of the Spring and Summer months.  As spending heightens, as tourists bring money in that trickles down the path to others who then spend as well, the economy is due to see a boost.  The sun and better weather always brings more optimism and consumers should react with their money.  The new confidence will add to the economic recovery efforts and as the economy grows stronger the possibility of a rate increase heightens.

The second thing is that homeowners must get past the fact that the current interest rate has sat at 0.5 per cent for over two years.  This is not normal and should not be taken as a normal incidence.  It was the result of a recession.  The interest rate is going to rise.  With it will be a rise in the rates currently on offer from lenders.  Remortgages will no longer be found at the levels of today, for decades probably.  Things are going to get better in the economy, rates are going to rise, the savings in securing a remortgage today are going to disappear once the rate increase occurs.  For homeowners looking for a financial jump on impending rate increases, then keeping alert to those forecasts from analysts and a look into a remortgage are required.