The Bank of England’s Monetary Policy Committee (MPC) increased the standard base interest rate last week. It was the eleventh consecutive meeting for the MPC to hike the rate upward. This has proven to be a concern for experts for homeowners. Only a bit over a year ago, the rate was at an historic low, and now it is the highest it has been in over a decade. The change in a homeowner’s repayment levels could be dramatically different and for some it could lead to a lack of affordability.

Experts have been advising homeowners to seek the opportunity to find some security within this rapidly and ever changing economic environment by shopping for a remortgage. The reason is that a remortgage could offer a homeowner relief from a usually higher standard variable rate (SVR) and offer the ability to choose a fixed rate and secure one that will not increase should the MPC raise the base rate further.

There are many homeowners that obtained their current mortgage term when the MPC had lowered the base rate to an all-time historic low. The rate was at almost zero at 0.1% up until the rate hikes began in December 2021. Those homeowners will have been paying their mortgage with a very low and affordable interest rate that will come to an end at the expiration of their mortgage term.

When a homeowner comes to the end of their mortgage term, they have the choice to remortgage or they will be moved to their lender’s SVR. A remortgage could usually offer a lower interest rate and in some cases half the rate level of a SVR. Again, a remortgage could not only have the lower interest rate but with a fixed rate be locked in and shield the homeowner from further rate hikes throughout the new term.

It is easy to shop for a remortgage online to determine what opportunities for savings and security are available. Remortgage lenders offer the ability to get a quick quote after answering a few questions. Visiting the website of a remortgage broker offers the ability to get many quotes from a variety of lenders to review and compare to find the best remortgage. Brokers also could have exclusive deals available that are not offered directly from lenders to borrowers. 

With the ability to so quickly discover the benefit of remortgaging, experts encourage all homeowners to consider remortgage shopping no matter where they are in their mortgage term. It offers valuable information as to the current opportunities in remortgaging, and insight into how lenders are viewing the borrower and the risk in lending. This is a real concern and something homeowners should be aware of due to the economic pressures that have caused some homeowners to risk going into negative equity and becoming out of reach of a remortgage.

There is the possibility that homeowners could experience property value declines if the housing market suffers as hopeful home buyers step back due to higher borrowing costs and affordability issues. If homeowners experience a property value decline and it falls below the level of debt on the property the homeowners are in negative equity. 

Lenders consider the loan to value or LTV as one determination for lending. The higher the value of the property against the amount of the loan, the lower the risk in lending. Therefore, the borrower is usually offered lower interest rate deals. A homeowner in negative equity is without the option to remortgage unless they can offer funds to take their LTV to a less risky level.

The Bank’s MPC will not be meeting again until May with April as an off month. This allows time for homeowners seeking to save money to begin shopping for a remortgage. The rate is now at 4.25% and experts do not believe it is the last hike in the rate needed to control inflation and send it permanently downward. Also, shopping for a deal is likely to turn up an attractive offer as the slower demand in lending has led to a more competitive lending market. There have been reports of some lenders bringing new remortgage products to the market with lower interest rates than previously found in the past few months.

The Bank’s standard base interest rate is now higher than it was this time last week. It could grow higher in May and possibly more throughout the year before inflation is tamed. No one can predict what the economic outcome will be in the months ahead, but it certainly is clear that right now is likely the best time to shop for a remortgage rather than miss the current opportunities available.