As expected, and forecasted, the Bank of England’s Monetary Policy Committee (MPC) has voted to keep the current standard base interest rate steady at 5.25%. This is despite the fact that the day before, the latest data revealed for the first time in three years, inflation dropped to target rate of 2.0%. Reaching the target would be thought to trigger a rate cut as reaching the level set by the Bank is the goal of raising the base rate. However, there are issues that cannot be overlooked in the economy and the MPC is moving forward cautiously. 

Voting to hold the rate steady for the seventh consecutive meeting has been an unexpected outcome considering the start of the year. Inflation was forecasted to reach target sooner and the rate cut we are still waiting on was expected for early spring. Now we are in summer, and the first-rate cut might not occur until autumn is here.

There is not a scheduled MPC meeting for July, so the first opportunity for a rate cut is in August, but again the committee is expected to allow the rate to stay steady and do its job thoroughly. The most agreed upon possible forecast for a rate cut has been moved to September. This lessens the outlook for there to be more than one rate cut this year.

When the MPC cuts the rate, it is expected to be only 0.25%, and when it does occur, the hope for lenders to rush low attractive deals to the lending market in expectation of another sooner than later cut might not happen. This means the rates currently available from lenders might already be reflective of what would be offered if the MPC had voted this month to cut rates.

This is why experts are encouraging homeowners to shop online for attractive rates and take advantage of the competitive lending market. This is a much smarter strategy than putting off a remortgage as one is coming to the end of their mortgage term. Without choosing a remortgage, the homeowner will be moved to their lenders standard variable rate or SVR and will be paying more than they need to be paying if they would just remortgage. 

Remortgage rates are normally much lower than a lender’s SVR. Remortgage rates are possibly two or more times lower and therefore cheaper, offering substantial savings. Also, with a remortgage, homeowners could pick a fixed rate deal and lock in the rate for a new term. 

Avoiding a SVR and the extra money going out of the budget awaiting much lower rates than what is already available is not the best strategy, so say experts. The MPC has pushed off a cut to the base rate past the expected and might need to past September. Meanwhile, there are already attractive deals to be found that could save money now.

The recent decision of the MPC is to allow inflation to settle and assure it will not climb requiring a reversal of the committee in cutting the rate too soon. 

The Bank’s governor, Andrew Bailey, remarked, “It’s good news that inflation has returned to our 2% target. We need to be sure that inflation will stay low and that’s why we’ve decided to hold rates at 5.25% for now.”

Out of the nine members of the MPC, as in the last meeting, seven voted to keep the rates on hold. The two members voting for a rate cut had sought a 0.25% reduction of the base rate to 5.0%. It now remains at a 16 year high and despite the MPC voting since last September to hold the rate at the peak of 5.25%, there has been adjustment to accepting higher rates and leaving behind the expectation of rates to return to the pandemic caused historic lows of just a few years past.

Research currently released has revealed that homeowners and small businesses that once paid on interest rates obtained during the pandemic are now facing rates double or more of what they were used to, and the financial strain is heavy. There will be no relief for borrowers at the levels once offered, but in shopping around, a borrower could likely discover savings. 

Shopping online for a remortgage is fast and easy and it requires no commitment. After answering a few questions, lenders will offer quotes of what deals are available for the homeowner to review. For an even quicker experience, and to possibly find exclusive deals, shopping the website of a remortgage broker could offer numerous quotes from a variety of lenders ready to be reviewed and compared in moments.

The base rate might or might not be reduced in August, and it will likely be minimal when it occurs. Rather than pay more than necessary, homeowners that could benefit by cheaper rates now should certainly avoid a SVR. The path to savings and peace of mind could be found in a few clicks in a matter of minutes by remortgage shopping online.