Warnings of interest rate increases have caused a rush to remortgage according to recent reports. In an attempt to escape paying more due to higher interest rates, homeowners have taken action and sought a new deal. According to the Bank of England, there was an increase in the number of remortgages in the last quarter of 2021. The number of homeowners seeking remortgages is expected to grow due to continued threats of rising rates and the tightening on budgets due to increasing inflation.

The Bank of England’s Monetary Policy Committee (MPC) will meet this week on Thursday and they are expected to hike the rate for the third meeting in a row. In December, the rate was increased from 0.1% to 0.25% which is more than a double increase. The next meeting was held in February and resulted in the standard base rate increasing by double to 0.50%. This week the rate could be increased to 0.75% or higher according to forecasters.

It also could be only one of several rate increases expected throughout the year.

Inflation could reach 7.5% in April. The target rate set by the Bank of England is 2.0%. Due to the level being more than three times the target, it is not likely that the MPC would miss the opportunity to slow down the economy and the rising rate of inflation, especially due to the war in Ukraine’s impact could push inflation higher and for longer. Therefore, the expectations for the year could actually be more interest rate hikes or higher increases per hike to keep inflation from rushing higher and causing more of a stranglehold on consumers.

As an example as to what homeowners are being offered or could face with higher rates, the average two year fixed rate deal is now at 2.65%, which is the highest the rate has been since 2015. 

There are homeowners that have had their mortgage deal end and rather than remortgage they have had their loan moved to their lender’s standard variable rate (SVR). On a SVR, a homeowner could be paying much more in comparison to a remortgage interest rate level and their repayments will be quickly adjusted to rate increases by the lender. SVR loans are only suited for those capable of absorbing higher payments quickly as it could cause a financial burden to those on a tighter budget or be unfavorable to those averse to paying more than necessary.

Remortgaging is still quite favorable to borrowers as competition between remortgage lenders is helping to keep deals attractive. Though the rates available now might quickly disappear with a MPC rate increase and that could happen numerous times this year and possibly next. 

Rather than pay more with rising interest rates, shopping for a remortgage is encouraged by experts. It can be done quickly and easily online and the homeowner could get quotes to review by going website to website at their own convenience. Shopping online with remortgage brokers could offer a one stop shop experience with a variety of quotes from different lenders available to compare. 

By shopping online a homeowner could discover the savings possible and be motivated to take action to remortgage and escape the burden of higher interest rates sure to come.