Waiting until there is a rush on remortgages due to an interest rate increase is like waiting for a fire to break out before shopping for a fire extinguisher.  Once the rate increases, there are many things already lost, like the lower interest rate that was available before the increase.  According to the Financial Services Authority even a small rise in the Bank’s interest rate could put many households in the position of being unable to afford their monthly mortgage payments.  Many homeowners are completely unaware of what a rate increase will actually do to their payments. 

In the beginning of the year there were heavy warnings that the Bank would increase the interest rate, but when there was little economic growth the Bank regulators left the rate unchanged at 0.5 per cent.  The warnings came and went and many homeowners found good deals on remortgages with the majority of them choosing fixed rate remortgages to protect them from future interest rate increases.  Now, warnings of a rate increase have eased and many homeowners have backed off of searching for a remortgage until warnings increase again.  Some of these homeowners are enjoying the low rate of their lender’s variable interest rate but are sitting on a risky deal. 

Those homeowners who have had their mortgage deal end and have converted to their lender’s standard variable rate can have a rate increase even if the Bank leaves theirs unchanged.  The lenders can raise their own standard variable rate when they see fit.  With many homeowners able to make an easy switch to another deal with their own lender or the ability to leave to a more competitive deal, it is a wonder so many would risk paying a higher interest rate.  Now that forecast warnings have eased, lenders will be offering more attractive deals to lure in homeowners.  It is in the time that the rush has slowed down that homeowners should be shopping for a remortgage.  It’s always better to have the fire extinguisher in place before the fire comes, and there will be an interest rate increase at some point and the deals available today may not be here tomorrow.