This Thursday, the Bank of England’s Monetary Policy Committee (MPC) will meet for one of the last two meetings of the year. This meeting is particularly important as it is expected it will result in a majority vote by the committee to reduce the standard base interest rate. The current rate is 5.0% and with the projected cut of 0.25% the new base rate will be 4.75%. If the cut does occur, it will be the second of the year.

The first cut to the base rate was voted for in the August MPC meeting. It took the base rate to 5.0% from 5.25% which had remained steady since the increase was voted for in August 2023. The peak rate of 5.25% was a sixteen-year high took the inflation rate down to the final goal of the target rate of 2.0%.

Inflation data in the last report for the twelve months to September and released in October, surprisingly revealed inflation had dropped to 1.7%. The lower than target inflation rate is the reason most experts believe the MPC will vote for a cut in their meeting this Thursday.

Further rate cuts are expected next year, and for the base rate to possibly reach a low of 3.75% by the end of 2025. Until then, borrowers with the need to mortgage or remortgage now will have to choose from the rates offered by lenders currently. 

Mortgage and remortgage rates have already been reduced below the current base rate and could actually be reflective of the available rates after Thursday’s meeting should the vote to reduce the rate happen. 

Lenders have been marking down their rates for months. Prior to the first rate cut in August to 5.0%, lender rates had reached near 4.0%. In the last few weeks, some lenders have raised their rates slightly and those that have done so were likely responding to the rising cost of swap rates, which are the interest rates at which lenders borrow and lend to one another. However, it could have also been due to the deep cuts to their own lending rates much lower than the Bank’s base rate. 

As demand grew, some lenders may have met their own lending limits at the lower than base rate or sub prime levels and pulled their lowest interest rate deals. 

Once the most recent inflation report was released, revealing it had dropped below target, the optimism for another cut in November grew. This triggered some lenders to begin reversing their recently raised rates or offering new products, still not as low as before but with a reduction all the same.

One particular note for borrowers is the expectation of inflation to rise above 2.0% during the winter season. Since this is expected, there should be no worry of the MPC voting to increase the rate to control the growth of inflation. At least as long as it remains near the target rate, despite being higher than the current 1.7% or rising above 2.0%.

Homeowners are taking advantage of the attractive interest rate deals available. Some had their mortgage term end and allowed their lender to move them to their standard variable rate of SVR. This likely has them rushing to remortgage and escape the riskier and higher interest rate of a SVR. The savings found by choosing a remortgage and moving off a SVR can be substantial for many homeowners.

It is easy to discover what remortgage offers are available by simply shopping online for a new deal. A one stop shopping experience could be quick by simply visiting the website of a remortgage broker. They work with many lenders and often have exclusive deals from lenders not offered directly from lender to borrower. By visiting a broker website, a homeowner could obtain several quotes from numerous lenders. There is also the option of going from lender website to lender website to gather quotes.

Once quotes are gathered, it is simply a matter of reviewing and comparing them for the best deal for the homeowner’s unique needs. Some may want to move off a higher interest rate SVR, others will be avoiding a SVR all together by remortgaging before their current term ends, while some may have the need to remortgage to release built up equity into cash or other particular need. 

No matter what the need, shopping for a remortgage is encouraged by experts for the information gathered will be the launching pad from which to form a smart strategy for perhaps a stronger financial outlook in the coming year.