The next meeting of the Bank of England’s Monetary Policy Committee (MPC) will be held on 22 June 2023. The forecast is for yet another rate hike as inflation has remained stubbornly high despite the previous twelve consecutive rate increases so far. During the May meeting, the base rate was increased from 4.25% to 4.5%. The 0.25% increase was the slow and steady choice made during many of the past hikes to the standard base rate. However, since inflation remained far above the target rate of 2.0% at 8.7% down from the 10.1% reported in March, there could be a 0.50% hike at this month’s MPC meeting.

Currently the base rate is at the highest level since 2008. The Bank’s standard rate sitting at 4.5% is much higher than it was a little over a year ago when it was almost zero at 0.1% in December 2021. Borrowing is now more expensive than it has been in fifteen years and could be getting even more costly.

Homeowners have been told to take notice of the current rates offered by remortgage lenders, for while home buyers would be able to consider affordability issues at today’s rates, homeowners could be financially shocked as their mortgage term ends and the higher rates are forced upon them.

At the end of a mortgage term, homeowners have the choice to either allow their lender to move them to their standard variable rate (SVR) or they can remortgage. A remortgage is considered the better choice when rates are rising and when savings are important to the homeowner. SVRs currently could be at a rate double or more what could be found with a remortgage, so avoiding a SVR could save money. Also, a fixed rate remortgage could be chosen which would lock in the new rate and shield the homeowner’s budget from further rate hikes.

Discovering what remortgage offers are available is simple as it can be done quickly online. A one-stop shopping experience could be had by visiting the website of a remortgage broker. In a few minutes, numerous quotes from a variety of lenders could be in hand to review and compare. Also, brokers often have exclusive deals from lenders not offered directly to borrowers. Going from website to website of remortgage lenders is also a way to collect quotes to compare.

Two years ago, there was a buying boom in the housing market as borrowing was very cheap. The most popular product was the fixed rate mortgage. The calendar has moved forward, and there are thousands of homeowners that have come to the end of their mortgage term or nearing the end. So far, they have been enjoying their fixed low rate and increases will not have touched their household budget. As their terms expire, not only will the homeowners no longer have their historically low interest rates offered, but they will be facing future rate hikes as the MPC wrestles with inflation.

This is why some homeowners have chosen to take on a penalty fee to end their mortgage term early as it allows them to remortgage at current rates rather than wait when their term ends and possibly face higher interest rates. Experts encourage homeowners to seek information from their current lender as to when they can remortgage without penalty fees as they may be in the window to do so and could remortgage now before rates increase again.

The forecast is for the peak interest rate to reach 5.5% before inflation is at a more comfortable level and nearing target. That would possibly mean four more rate hikes of 0.25% to come or larger rate increments to the standard base rate if the MPC takes a more aggressive approach.

That could be the case later this month as the MPC will not meet again until August after the June meeting. Rather than perhaps allow inflation to remain steady or creep upward, a stronger choice of a 0.5% increase could occur in June to act upon inflation until the next meeting in August.

Homeowners could not have imagined two years ago when the Bank’s base rate was at a historic low that less than two years later the rate would rise to a level greater than it has been since 2008. Yet, it should not be forgotten that it is forecasted to rise further making borrowing more expensive for home buyers as well as for homeowners facing new rates as their terms expire in 2023.

The weekend could be the perfect time to set aside a few minutes to shop online for a remortgage and put a smart savings strategy in place for the near and distant future as rates are set to climb further this year and possibly into the next.