Homeowners that have their mortgage deal end and do not move to a new deal are automatically converted to their lender’s standard variable rate (SVR). Currently homeowners may not be afraid of such a conversion since many lenders have low interest rates with their SVR. However, once the interest rates begin to rise the situation could be damaging to a household budget that is not prepared for a possible quick rate hike.

Another consideration for those comfortable on their lender’s SVR is that they could find the process to getting a remortgage tougher than before due to new regulations. Some may actually find themselves stuck on their lender’s SVR and unable to get a new deal.

A new EU law could impact the ability for UK homeowners to get off a SVR and remortgage. Even those homeowners with a deal close to ending could be impacted as they too will find the paperwork to a new deal more restrictive.

Experts are encouraging homeowners to make sure they have the mortgage they are comfortable with and to prepare ahead. With the cheap rates being offered by lenders it may be the best time to begin considering a fixed rate for a long term while regulations are more relaxed than they will become this autumn.

The new EU Mortgage Credit Directive is in place as of March 2016 but can be backdated by six months. The regulation applies stress tests to the borrower’s ability to afford a mortgage or remortgage even if interest rates rise. Currently UK lenders can bypass certain aspects of the new regulations for homeowners seeking a remortgage, but once the EU regulation goes into effect lenders will not be able to give homeowners a pass and they will be facing the stricter lending rules. Those that do not meet the new lending criteria will find themselves stranded on their lender’s SVR which could mean higher interest rates in the future.