Warnings have been issued for over a year to prepare for higher interest rates. It has been a bit of confusion for most homeowners as rates from lenders rose, fell, stuck and are now climbing again. It was the end of 2021 when the Bank of England’s Monetary Policy Committee (MPC) began increasing the standard base interest rate following historic lows due to the global pandemic. The first increase of thirteen consecutive MPC meetings that resulted in rate hikes took the base rate from almost zero at 0.1% to 0.25%. Now, a year and a half later, the base rate is at 5.0% after the June meeting hike of 0.5%.

There is not a scheduled MPC meeting for July, with the next in the beginning of August. This relief from yet another rate hike for a few weeks will give homeowners time to consider how to weather the storm that is here and the worst that is yet to come. According to experts, more rate hikes will come and the peak rate of the MPC to counter inflation will be 5.75%.

While the Bank’s rate is 5.0%, lender rates are of course higher. The average rate on a five-year fixed deal is over 6.0%. A two-year rate average is close to 6.5%. Each of these averages reflect an increase from the previous day this week as rates from lenders rose from Monday into Tuesday.

Lenders are feeling the risk in lending to borrowers and while rate offers have climbed, lending has also become less competitive. There are less products on the market to choose from as lenders have begun pulling their best deals and, in some cases, not even replacing them with higher rate deals. 

The quick pace at which the rate has increased has put a strain on borrowers that have already faced hardships due to the pandemic lockdowns, inflation, and higher energy costs in winter.

There are many homeowners coming to the end of their current mortgage deal in 2023. Those that have had or will have their two-year fixed rate mortgages end will no longer be paying on their likely historically low rate offered by their lender. Their mortgage will expire, and they will face rates much higher and for some affordability will be an issue.

While there is no way to turn back the clock and grab a historic low interest rate, there are ways to save money and keep from paying more than necessary. 

When a homeowner comes to the end of their mortgage term, they have a choice to remortgage or to allow their lender to move them to their standard variable rate (SVR). The SVR is likely to be higher, in fact it could be double or more the rate found with a remortgage. Avoiding a SVR by choosing a remortgage could save money for a homeowner, and it could be a substantial amount of money.

With a remortgage, the homeowner could also choose a fixed rate deal. It would lock in the interest rate and shield the homeowner from further rate hikes, of which previously mentioned could occur several times this year before the peak rate is reached. A fixed rate remortgage offers savings when the homeowner avoids further rate hikes and paying more.

Experts have been encouraging homeowners to consider a remortgage to avoid variable rates such as with a SVR and to remortgage sooner rather than later to keep from missing out on rates before they rise further. Many homeowners are able to remortgage six months before their term expires and still avoid penalty fees. 

There have been warnings of higher interest rates, of a slowdown in the housing market, and a long fight against inflation. All of these factors are currently in play and for homeowners it is causing a strain. There are even those unaware of the financial difficulties ahead when their mortgage term comes to an end. 

It is simple to discover what remortgage opportunities are available. Visiting the website of a remortgage broker could put quotes in hand from numerous lenders in a matter of minutes. Brokers often have exclusive deals from lenders not offered directly to borrowers, making shopping with a broker definitely an opportunity not to be missed. Homeowners could also visit websites of remortgage lenders to gather quotes to review and compare.

Once a remortgage opportunity is found, homeowners should take action quickly to make the most of the benefits available to better weather the financial storms of today and tomorrow, for things are changing quickly in the lending market and in a matter of days rather than weeks or months. Don’t miss out and start shopping for a remortgage soon.