Homeowners have been warned to consider a remortgage sooner than later. Those that allowed their mortgage term to end and did not remortgage were moved to their lender’s standard variable rate (SVR). Reports have shown that a SVR could be double or more the interest rate offered with a remortgage. In basic terms, the interest rate is the cost of borrowing. No one would certainly walk into a store and offer to pay more than double for an item when they could get it for less elsewhere. Rather than pay more than necessary, those on a SVR are warned to seriously shop for a remortgage, and so are those not yet on a SVR.

Homeowners nearing the end of their term are shopping, and if they aren’t they should be. There are savings to be found when considering that the rate is only expected to increase many more times before inflation is under control. Some homeowners are not even waiting until their mortgage term ends and are opting for current rates available in remortgaging. Taking on a penalty fee for ending their term early is considered by some worth the cost to allow them to avoid the possibility of higher rates when their term was due to end. They consider the penalty fee simply an access fee to a lower rate remortgage now and access to the savings allowed by avoiding further hikes.

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 rate was at an all-time historic low, of over 300 years, in December 2021, before the MPC increased the 0.1% rate to 0.25%. For the next four meetings the rate was increased by 0.25%. The last two meetings, including the September meeting, resulted in increases of 0.50%. The rate has gone from 0.1% to 2.25% and by the end of the year it could be much higher.

Last week the MPC increase was seen as a necessary cost by those that have yet to remortgage. There would be time before the next increase as there was not a scheduled meeting for October. The next scheduled meeting is set for 3 November. This allowed weeks for homeowners to either move off of their risky SVR, end their term early, or come to the natural end of their term and finally remortgage with peace of mind.

However, government policy news on Monday sent the pound spiraling downward to a low that prompted the Bank to warn of an emergency meeting to increase the rate further.

This would mean another increase before the scheduled meeting in November. Experts sounded off at solutions and expectations with some calling for a drastic increase of perhaps a full point. 

The Bank’s rate translates into a lender’s offer of an average of around double or more depending on the type of loan, the length of term, and other factors such as the loan to value (LTV) and the homeowner’s credit history. The shock for some homeowners even without an emergency MPC meeting increase is a lot. Those that mortgaged during the 0.1% historic low rate will find themselves facing rates based on the highest in 14 years.

The stern warning from the Bank that they are prepared to take strong action against inflation threats should put a fire under the feet of those standing in indecision. The time to rush to remortgage just got real. 

There is no need to pay more when savings could be found, so homeowners could remortgage rather than be moved to a lender’s risky SVR when the term ends. Choosing a fixed rate remortgage offers protection from further increases throughout the new term, which is why some are opting for longer terms, such as a five-year remortgage. 

Shopping for a remortgage is simple and quick to do online. A few minutes after visiting the site of a remortgage lender a quote could be in hand to review. Shopping online with a remortgage broker could offer many quotes from a variety of lenders to review and compare. Brokers sometimes offer exclusive remortgage deals, so they are certainly worth spending a few minutes with online on the chance to get the best remortgage possible.

It's time to remortgage rather than face the higher rates expected and pay more. Especially when savings could make such a difference as the costs of foods, products, and services soar and energy costs are due to break many a household budget. 

The time to remortgage is now, it would have better to have done so yesterday, or earlier in the year, but it is certainly better to do so soon rather than later.