The UK housing market has remained resilient due to the strong hopes of those yearning to become homeowners. The ability to own a home used to be an easier dream to make come true than it is today. New homeowners are older than in years before due to the difficulty in saving for a deposit, qualifying for a purchase, and the higher costs of starter homes. However, when the pandemic impact to the economy caused the Bank of England’s Monetary Policy Committee (MPC) to lower the standard base rate to an over 300-year historic low rate of almost zero, the cost of borrowing had not been cheaper in centuries and homeownership dreams came true.

With the base rate at 0.1%, lenders offered their own historic low interest rate mortgages to hopeful homebuyers. Rather than backing away from the housing market when the pandemic loomed over the economy, home buyers found they could not pass up the opportunity to buy with such low mortgage interest rate offers.

The pandemic lifestyle that pushed for the need to find homes with more internal and external space brought buyers to the countryside and long overlooked larger properties outside city life. As demand grew, the housing market boomed, and the average house price grew to new record highs month after month.

The dream home buying frenzy brought on by the pandemic, historic low interest rates, and families adjusting their lifestyles and priorities in work life balance was a surprise to many experts and few could warn of what was to come for the hopeful home buyers who had made their dream home purchases.

Inflation grew rapidly in 2021 as the UK quickly sought to return to normal following the pandemic becoming more controllable due to vaccines and natural immunities. At the close of the year, in December 2021, the MPC began the first of eleven consecutive meeting votes to raise the base rate. In a little over a year, the rate has grown from 0.1% to 4.25% in March of this year.

The homeowners that purchased their homes with very affordable historic low interest rates are nearing the end of their mortgage terms or have done so already. At the end of their terms, they could remortgage, or their lender will move them to their standard variable rate (SVR). A remortgage typically has a lower interest rate than a SVR, so choosing a remortgage is like choosing to pay less and saving money. 

A remortgage also allows the homeowner to choose a fixed rate deal which would lock in the interest rate and protect the homeowner’s household budget from further rate hikes. The next MPC meeting is due to be held in May, without one in April. Therefore, there are a few weeks to shop for a remortgage and choose a current interest rate before the base rate could be hiked again.

Inflation remains in double digits and more rate hikes could be needed by the MPC before it begins to turn strongly downward toward the Bank’s target of 2.0%.

Experts encourage homeowners to shop for a remortgage to keep from paying more than necessary and saving money is likely a priority for most households. Homeowners have been facing inflation, higher energy costs, usual homeownership maintenance costs, and rising interest rates. Coming to the end of one’s mortgage term could have a homeowner put onto a SVR paying hundreds of pounds more per their usual monthly repayment. This overload of financial stress could create a situation where the homeowner is struggling to afford their dream home.

Rather than be caught unaware, experts encourage homeowners to remind themselves of when their mortgage term is to end. It is never too early to start shopping for a remortgage as the information could help a homeowner to prepare for what changes in the offered interest rates will require of their budget in the future. 

Unfortunately, for some it will signal a need to sell their home while they can and make the most of a difficult situation. Others will seek to get assistance from their lender to help them in affording their monthly repayments as some have special lending offers to help keep homeowners in their property. The usual method of saving money and setting up a homeowner to handle the current economic waters is to remortgage.

Shopping for a remortgage early offers valuable information for homeowners. It is also a very smart strategy for those that have already had their mortgage term end and are paying on a SVR. Their interest rate could be double or more the interest rate level that could be found with a remortgage. As previously mentioned, a fixed rate remortgage could shield them from further rate hikes throughout their new term. 

Some homeowners have chosen to take on a penalty fee to end their term early to allow remortgaging at current interest rates and avoid possibly higher ones should they wait out their term. This is not the best-case scenario for all homeowners, but it is a consideration in the right situation. Remortgage experts could offer more detailed information as to how much an early termination fee might be, the benefits for the individual homeowner, and what savings and benefits could be found.

When remortgaging, homeowners will not be shopping interest rate offers similar to the ones found only a few years ago. They are many times higher, but the best of current rates still offer savings over a SVR and further rate hikes. 

Shopping online for a remortgage is easy. In a matter of minutes, visiting a remortgage lender website could offer a quote. Visiting the website of a remortgage broker could put many quotes from a variety of lenders in hand for a homeowner to review and compare. Brokers often have exclusive deals not offered directly to borrowers, which is why many experts encourage homeowners to shop with brokers. This is especially true if the homeowner has a complicated remortgage need because the broker will have worked with many lenders and could have knowledge that would be helpful in matching the homeowner to the best lender for their special needs.

Rather than allow a dream home bought during the pandemic to turn into a nightmare, a homeowner could avoid financial strains and survive the current economic waves by simply shopping for a remortgage. It isn’t going to be easy, and some will find our current economy difficult for some time, but keeping the dream alive in their beloved home could be as simple as remortgaging to save money.