More warnings are being issued of an impending interest rate hike.  This should be heeded seriously by those homeowners that are near having their current mortgage deal end and for those that have had their mortgage deal complete and have converted to their lender’s risky standard variable rate (SVR).  There is now a strong likelihood with all economic signs staying on course as is, that the Bank of England’s Monetary Policy Committee (MPC) will move the interest rate upward by the end of this year.

The current rate has been in place since March 2009 and has held steady since then at the historically low level of 0.5%.  This has allowed borrowers, including homeowners seeking remortgages and home buyers seeking property, to take out cheap loans. 

According to external MPC member Ian McCafferty, the data received on the state of the economy over the next few months will determine how soon the interest rate is changed.  He remarked that the MPC should not wait too long in reacting once the data shows the need to raise the rate is there.

He said, “A fuller understanding of why productivity has remained so weak, and to what extent it is therefore likely to recover, is critical for the path of interest rates as the expansion continues.”

The recently released minutes from the MPC’s June meeting showed that while all nine members voted to keep the interest rate steady there was a “mood” to the minutes that showed there would be a ready committee to act when needed to begin moving the interest rate upward.

Homeowners should be aware that switching quickly to a remortgage deal will require a longer processing time due to the new Mortgage Market Review guidelines.  Therefore careful planning, patience and not waiting too long to switch will be critical in gaining one of the cheap remortgage deals that is currently being offered.