Homeowners have been given a forecast that should have them putting remortgaging on the top their priority list. According to data from the Office for Budget Responsibility (OBR), mortgage interest payments are set to rise to the highest level since at least 2008 within the next two years. The OBR report suggested that interest rate payments could increase by 13% in 2023 which would be a drastic hit on household budgets that are now enjoying historically low interest rate levels.

The current standard base rate set by the Bank of England’s Monetary Policy Committee (MPC) is at the lowest level ever set since the Bank began over 300 years ago. The cut in the rate was voted on by the MPC in response to the economic impact of the global pandemic last year.

Home buyers have secured some of the lowest interest rates in their mortgages ever offered by lenders. Homeowners that have skipped the opportunity to remortgage might be enjoying low rates on their lender’s standard variable rate (SVR) despite possibly saving even more with a new deal. However, with a 13% increase in the interest rate level over the next two years, it could be a major blow to homeowners that have become accustomed to paying low rates.

This news could have hopeful home buyers frantic to climb onto the property ladder while they can afford to do so with cheap borrowing. They are being cautioned to plan for rising rates in the years ahead and be ready to pay more than they are now. By securing a fixed rate deal for a long term, home buyers could escape the rising interest rates for longer.

Homeowners are likely to take remortgaging more seriously now. There are many remortgage products on the market currently that have fixed rate deals for long terms. Locking in a low and cheap rate for years ahead could save a homeowner a substantial amount of money not only now but when rates begin to rise and reach a possible level above what was the norm before the economic crisis.

It is a concern that many homeowners could be caught unaware of the change in their repayments when their current mortgage deal ends or their SVR begins to rise. The increase in interest rate levels could lead to many not only suffering financial difficulty, but some could lose their ability to afford their repayments and risk losing their homes.

Experts have warned that home buyers and homeowners should consider the current low interest rates and cheap borrowing to be abnormal and prepare for rising rates as early as next year. Along with that advice has been encouragement to shop for a remortgage and if newly in a mortgage to plan to remortgage as soon as possible when the current deal ends to secure a low rate. It could save money and protect the household budget from unexpected expenditures brought on by rising rates. 

This news could cause many homeowners to take action to secure a remortgage now at an attractive low interest rate even if their mortgage deal is not ending or close to ending. Choosing to pay a fee for remortgaging early might be a smart strategy to lock in a low rate now rather than wait and only have higher rates to choose from later.

The news of the possibility of a double digit increase in interest rates will likely grow louder as experts warn home buyers, home movers, and homeowners. It is certainly not to be taken lightly in the face of losing the opportunity to lock in a low interest rate now while it is still possible.