Remortgages can offer homeowners the security of an interest rate they can trust.  They will with a fixed rate remortgage know exactly what their interest rate will be for the term of their deal.  With a tracker remortgage a homeowner will know that the range of their interest rate increase or decrease will be dependent on the decisions of the Bank of England’s rate regulators.  However, with a lender’s own standard variable rate there is little security and homeowners on that rate are at great risk.

When a homeowner has their current mortgage deal end if they do not remortgage they move over to their lender’s standard variable rate.  This rate can move up or down according to the will of the lender.  For a homeowner on a tight budget they are taking a risk if they cannot afford a quick change in their mortgage repayments.

Recently many lenders gave notice that the cost of lending has increased and they must share that cost with borrowers.  This is prompting an increase in the lenders’ standard variable rates and homeowners need to seek a remortgage if they need security.

There is also the push to remortgage for homeowners due to the upcoming changes in lending criteria.  The Financial Services Authority will be putting new guidelines in place that will make it harder to borrow.  The one point of good news is that the Bank of England’s Monetary Policy Committee is not expected to raise the standard base rate all year.  Homeowners must make careful decisions to determine if a remortgage is right for them now in the midst of rising standard variable rates and tougher lending rules.