The Bank of England has warned that more interest rate hikes are to come to help take control of rising inflation. The warning is accompanied by more as it is suggested homeowners prepare to face mortgage distress as they face higher repayments. To secure a safety net against the rising rates, homeowners are encouraged to shop for a remortgage. Through choosing a fixed rate remortgage deal, a homeowner could lock in an interest rate and avoid the impact of further rate hikes.

Reports concerning current rate offers from lenders reveal that mortgage rates are at the highest levels since 2008. Further rate hikes will likely push up lending rates more.

The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate at each of the last seven consecutive meetings. The first of the seven meetings was last December. It ended the historic low 0.1% rate that had come about during the start of the pandemic and lockdowns. Last month, the September meeting resulted in a 0.50% increase that pushed the base rate to 2.25%.

There are expectations that the MPC could take a more assertive stance in fighting inflation and increase the rate by more than the 0.50% that occurred during the last two meetings.

There is not a scheduled MPC meeting for October, but there are meetings to be held in both November and December. The year could likely end with a base rate of over 3.0%. Borrowers will then see offered rates from lenders at double or more the base rate.

Experts are worried homeowners will be ill prepared for the rates they will be facing when their mortgage terms end. For instance, those that mortgaged or remortgaged when the rates were connected to the Bank’s over 300 year historic low base rate of 0.1% could be facing new rates that are higher than in over a decade.

Repayments could be so much higher that it could cause significant financial pressures on household budgets.

Homeowners that allow their mortgage term to end and choose to not remortgage are put on their lender’s standard variable rate (SVR). A SVR could be acceptable and affordable when rates are declining. However, when rates are rising, a SVR could rapidly increase financial stress for a homeowner.

A SVR could have a rate level of double or more what could be found with a remortgage and subject to quick rate increases.

Therefore, homeowners that have allowed their mortgage term to lapse without a remortgage should certainly consider shopping for a deal. Other homeowners, those that are close to having their mortgage term end and even those not close are suggested to shop for a remortgage as well.

Some homeowners are choosing to accept a penalty fee to end their mortgage terms early to allow for remortgaging with current rates rather than wait out for their term to end and possibly face higher rates later on.

No matter where a homeowner sits on their mortgage term, shopping for a remortgage is a smart strategy. It is easy to do online. A few stops to different remortgage lender’s websites could put quotes in hand to review. A one-stop online shopping experience could be had by visiting a remortgage broker website. A homeowner could have several quotes from a variety of lenders to compare in only minutes. Brokers could also have exclusive deals.

The warnings are clear that financial strains are ahead for many and homeowners could deter some of those financial hardships and perhaps find savings and peace of mind through a remortgage deal.