Homeowners may be confused to read in one financial report that the Bank of England’s Monetary Policy Committee (MPC) has voted in their latest meeting that they will be leaving the standard base interest rate steady only to later read that lenders are raising the interest rate on their remortgage offerings.  Some lenders are beginning to change their remortgage offerings.  They are pulling their cheapest levels and replacing them with higher offers.  Some are not even replacing the pulled remortgages leaving less remortgage products available to homeowners to choose from.

Lenders are also independently raising they standard variable rate (SVR).  Those homeowners that have had their current mortgage deal end are converted over to their lenders standard variable rate if they do not seek a remortgage.  Without a remortgage to set a new mortgage deal in place for a term the homeowner pays their mortgage repayment on the lenders’ SVR which is a risky interest rate.  The lender can raise or lower their SVR independently of the MPC which occurs usually when the cost of lending increases.  To offset the increase in lending for the lenders they pass on the cost to customers.  Increased cost in lending is one of the reasons given for lenders giving notice to customers that they are going to increase their current SVR.

The MPC sets the base rate that lenders use to base their own offerings and tracker deals upon.  However the offerings they give on remortgages and mortgages for purchase are independent of the MPC’s decisions just as the SVR levels are of the MPC.  Homeowners should take notice of when their own mortgage deal ends and choose if a remortgage deal now would be a good decision in the face of rising rates by the lending community.