The Bank of England’s Monetary Policy Committee (MPC) has voted during their March meeting to increase the standard base interest rate. This is the eleventh consecutive time the MPC has voted for an increase. It is now at 4.25% and many experts believe it will not be the last time the rate will increase. It could reach 4.5% by this summer. This information should be considered by those that could be financially impacted by higher interest rates.

It was reported that inflation actually grew to 10.4% in February and the MPC chose to increase the rate by the chosen 0.25%. There could have been some reserve to keep it at that level of increase due to the hardships many are facing with higher interest rates. Any growth to inflation was expected to cause the MPC to take stronger actions with a 0.50% hike to the base rate.

The majority of seven members voted for the rate hike, while two voted for the rate to remain steady. The choice will sit steady until the next scheduled meeting in May as there is not an April MPC gathering.

The good news from the meeting is that there is no longer a recession looming in the months ahead as the second quarter is expected to see economic growth.

It is still a wait and see game however as to if the economy does see growth and the recession is starved off. Meanwhile, there is the problem developing due to higher interest rates. It takes awhile for change to occur at the consumer level despite changes at the overall economic level. So relief is not going to be felt for some time.

Inflation still exists. It is still causing issues for consumers. It has a long way to go from double digits down to the Bank’s target of 2.0%. Therefore, inflation may be with buyers through the year. Even when inflation begins to recede, it is warned that prices may not for much longer. Less money is expected to be available for household budgets.

Homeowners could be facing one of the greater financial strains. There are many that are currently on a mortgage term that was secured during the pandemic driven historic low base rate of 0.1%. At almost zero, borrowing was the cheapest it had been in over three hundred years. 

The cheap cost of borrowing made it affordable to move onto mortgages for properties much more expensive than might have been purchased years ago. However, house prices had grown many times to break record highs and the prices were seen as themselves overly inflated due to high demand and short supply.

The record low interest rates attached to those mortgages will be going away once the homeowner’s mortgage term ends. At the expiration of the term, the homeowner will either remortgage or allow their lender to move them to their standard variable rate (SVR). This is considered a risky interest rate since it is subject to increases as well as it usually being a higher rate than what could be found with a remortgage. 

This is why homeowners are being encouraged to shop for a remortgage. Doing so online is fast and easy. In a matter of minutes after visiting a remortgage lender website, a homeowner could have a quote in hand. Visiting several would offer quotes to compare. A quicker way to obtain quotes to compare is to visit a remortgage broker website. Homeowners could get many quotes from a variety of lenders. Brokers also could have exclusive deals from lenders not offered directly to borrowers from lenders.

The opportunity to discover savings with a remortgage is not to be pushed aside. Not only could the homeowner save with a lower rate than a SVR, but by choosing a fixed rate deal they could lock in the lower rate throughout the duration of the new term shielding their budget from further rate hikes.

As mentioned previously, there will not be a MPC meeting next month. The next scheduled meeting is for May. This leaves plenty of time for remortgage shopping and for homeowners to avoid any further rate hikes. 

It should be noted that currently there is a competitive mode among lenders. The lower demand for lending due to high interest rates has lenders offering not only attractive deals, but also important incentives such as free legal work or other fee waiving benefits. 

Remortgage shopping is considered a must for all homeowners according to experts and with the weeks ahead open and cleared of further rate hikes until possibly May, it is probably the best time to shop and get a remortgage if savings is a priority.