There has been a lot of good news for homeowners lately. All of it points to no further rate hikes by the Bank of England’s Monetary Policy Committee (MPC), that is as long as inflation continues to respond and head toward the target rate of 2.0%. It now stands at 4.6%, down from the previous report of 6.7%. The forecast is also for the second quarter of next year to possibly see the MPC giving relief to borrowers by cutting the standard base rate from the current 5.25%. 

The possibility of a rate cut by the MPC should be seen as exceptionally positive for those coming to the end of their two-year fixed rate mortgage deals in 2024. Despite the MPC increasing the base rate in 2021 from its historical low of 0.1% to begin the fight against rising inflation, the rates remained very attractive. By March 2022, the rate reached 0.75%. Homeowners would have still had mortgage offers from lenders that are vastly cheaper than what is offered on the market today.

Perhaps the MPC will lower the base rate in the second quarter, but the cut will not be to the levels seen in 2022. Therefore, the expiration of a fixed rate mortgage in 2024 will likely still result in a difficult transition for homeowners.

Experts remind homeowners that it is important to get reacquainted with one’s current mortgage. Knowing when their term will end, their current rate, and the type of mortgage loan they secured will help them in making a strategy to make the most of the situation they will find themselves.

Overall, experts encourage homeowners to consider remortgaging at the end of their term, for if they don’t, they will be transitioned onto the lender’s standard variable rate or SVR. Since a remortgage usually offers a lower interest rate than a SVR, it makes sense to avoid a SVR. Also, with a remortgage the homeowner could secure a fixed rate and protect from any rate hikes.

It doesn’t take the MPC increasing the standard base rate for lenders to adjust their SVR, or to change their offers to borrowers. If lenders see the global lending market as adjusting, or if the risk in lending due to economic pressures increases, lenders will make their own decisions as to what offers they will make and the rate of their SVR.

Homeowners should not leave their financial situation at the mercy of forecasts or expectations. There are ways to secure their situation and while not likely to discover lender rates near 2% as they were in 2022, it is possible to create a plan to not pay more than necessary.

A remortgage could offer a homeowner a better rate than a SVR, and with another fixed rate the same peace of mind could be experienced as has been the case when the homeowner was sheltered from the rate hikes throughout the last year. 

There have been some forecasts of restraint in considering that any decline in the inflation rate is a sign that all is well. Also, a healthy and normal economy does not have a standard base interest rate of 0.1%, so higher rates should be expected than the levels offered in 2021 and 2022 during the global pandemic.

As mentioned, there are optimistic reports for homeowners, including the latest from Knight Frank. Tom Bill, head of UK residential research at Knight Frank, remarked, “That is undiluted good news for anyone buying or re-mortgaging as the BoE’s task of taming inflation by raising rates feels closer to completion.

“The BoE could even start cutting rates as soon as next February, said influential Wall Street bank Goldman Sachs last week. Admittedly this would be in response to a weaker than expected economy, but the second quarter next year was the most likely time for a cut, the Bank said.”

He added there was some need for caution, stating, “A General Election campaign tends to create a national mood of uncertainty while any escalation of the conflict in the Middle East could prove inflationary if energy markets are rattled, which would put upwards pressure on rates again.”