While homeowners have been warned for awhile now as to the need to prepare for higher interest rates, it has been renewed as the Bank of England’s Monetary Policy Committee (MPC) is due to gather in less than a month to possibly raise the standard base interest rate for the 15th consecutive meeting. Already the rate has caused affordability issues for many homeowners, and there is little relief ahead as there are more rate hikes to come as inflation remains above target. Even a slight increase in the rate could amount to hundreds of pounds more per month for some homeowners.

The next meeting of the MPC will take place on 21 September. Recent polls of experts forecast the majority expecting at least a 0.25% increase in the base rate and some calling for 0.50%. The current rate is 5.25% and at the lower forecasted increase by the MPC would rise to 5.5%. 

With the Bank’s rate at 5.5%, a borrower could expect their choices of offered lender rates to be higher than the base rate. Having a rate choice above 5.5% is a vast difference when compared to rates offered only 2 or even 5 years ago.

There are homeowners that will come to the end of their mortgage term this year or next. Those on fixed rate deals will have avoided any rate hikes and will still be paying at their possibly historically low rate up until the expiration of their deal. However, once their term ends, they will have to either choose a remortgage or allow their lender to move them to their standard variable rate or SVR. 

The ability to choose a rate replicating their expired rate is impossible. In its place will be offers double or triple what they were used to paying. It could be a deep shock once the numbers are crunched, and a homeowner determines what they are facing in repayments. Despite the higher interest rate offers, it is essential for those wanting to avoid paying more than necessary to avoid a SVR in favor of a remortgage.

Not only will a remortgage offer a lower interest rate than a SVR making it possible to save money, but a fixed rate remortgage could shield the homeowner from further rate hikes which in turn saves them even more.

Interest rate increases by the MPC are made in order to tame inflation and bring it back towards target rate. The current rate is more than three times the target of 2.0%. It is predicted by experts that it will require the MPC to adjust the base rate by increases until inflation reaches below target in 2025. 

The increases might not continue during each consecutive meeting as has been the case since December 2021, but more increases will likely come. This negates any hope borrowers would have of the MPC cutting the rate.

Interest rates are higher than they have been in over a decade. They are three times higher or greater than what home buyers and homeowners were offered two to five years ago. Rates are more likely to increase throughout the rest of this year and into next as the MPC brings inflation closer to target. Borrowing is more expensive, will become even more expensive, and yet there is a way to save money by avoiding paying out more than necessary and that is by seeking a remortgage.

It is easy to shop online for a remortgage. Visiting the website of a remortgage broker could put numerous quotes in hand to review and compare. Brokers also often have exclusive deals from lenders that are not offered directly to borrowers. Homeowners could also visit the websites of remortgage lenders to gather quotes one by one. 

Once the homeowner narrows down the quotes to find the best opportunity for their unique borrowing need, taking action sooner rather than later is recommended. The next meeting of the MPC will be 21 September and while the base rate will likely increase then, lenders could increase their offerings prior to the meeting in response to global lending rates or the individual choice of the lender. 

Creating a plan for saving money for a homeowner starts with shopping for a remortgage. Online shopping is quick and easy and could in minutes offer up not only savings from avoiding unnecessarily paying more than needed, but also offer peace of mind in avoiding further rate hikes with a fixed rate deal. There is perhaps no better way to prepare for the economic environment ahead than simply shopping for a remortgage now.