The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate at each of the last six consecutive meetings. The first increase was in December 2021, when the historically low 0.1% rate was hiked a bit unexpectedly followed by five more increases. It had been forecasted that the first increase would occur in early 2022, but inflation grew rapidly and the MPC moved quickly to try to control it. This month, the sixth increase, the rate grew to 1.75% which is the highest in 14 years.

Homeowners are facing higher interest rates than seen in over a decade. Having had attractive and perhaps record low interest rate choices in the past, those that have their mortgage term end will be facing higher rates and more expensive repayments.

Those having already had their mortgage term end and did not remortgage but were moved to their lender’s standard variable rate (SVR) are encouraged to shop now for a new deal. Waiting could have them not only facing higher and higher rates, but also they could find lending tightening with fewer remortgage products available. If house prices and property values drop, homeowners could find themselves underwater which is being in possession of mortgage debt that is higher than the property’s value.

There are very attractive remortgage offers available and the most popular are those that offer fixed rates. By choosing a fixed rate remortgage, the homeowners locks in the interest rate for the duration of the term and therefore avoids further increases. The savings could be significant, as well as offer peace of mind to avoid paying more than necessary when inflation is causing difficulties for household budgets.

The Bank’s deputy governor, Dave Ramsden, has warned there will likely be a need to raise rates again to tackle inflation. The target rate set by the Bank is 2%, and yet the current level is 9%. This month the MPC offered a forecast of 13% by October and the start of a recession which could last five quarters.

Experts encourage all homeowners to consider shopping for a remortgage. Not only those on their lender’s SVR, but also those close to having their mortgage term end and perhaps even those not so close to their term ending. Some homeowners are taking on penalty fees to end their term early to allow them to remortgage now versus when their term would have ended. 

Remortgage shopping online is easy and in a matter of minutes a quote could be available to review. Visiting the website of a remortgage broker could offer many quotes from a variety of lenders to consider. Remortgage brokers sometimes offer exclusive deals from lenders that are not offered directly from borrowers so shopping with a broker could offer the best remortgage available.

The next MPC meeting is only weeks away and taking action sooner rather than later could be a smart strategy rather than watching one’s budget empty out due to higher inflation, higher energy costs, and higher interest rates.