The UK economy is in a recession according to the Bank of England. The Bank’s Monetary Policy Committee (MPC) met Thursday and released the minutes of the meeting shortly after. The realization of the economy being in a recession was less of a threat than inflation since the MPC voted to increase the standard base interest rate by 0.5%. The rate is now at 2.25%.

The gross domestic product (GDP) was reported with a decline of 0.1% in the three months to June. The current quarter is also expected to show a decline as inflation, higher interest rates, and higher energy costs caused households to slowdown spending. The final quarter of 2022 is also to show a decline in economic growth.

The current interest rate is now the highest rate level since 2008. Inflation is at the highest level in four decades. Energy costs are expected to take such a toll this winter that there are warnings of financial strains that will put some people below the poverty line.

While the warnings and forecasts are dire, there is still time to prepare and try to make the most of any opportunities available. One such opportunity is for homeowners to shop for a remortgage.

There are millions of homeowners that mortgaged when rates were at historic lows due to the global pandemic and have already had their term end or they are nearing the end of their term. The shock in how much more a repayment will be due to the rise in rates could be hard to fathom. 

Those that choose not to remortgage will be moved to their lender’s standard variable rate (SVR). A SVR could be double or more the rate level of a remortgage and more likely to have the homeowner seeing further rate hikes ahead.

With a fixed rate remortgage, a homeowner could lock in an interest rate, which would likely be less than a SVR and provide savings by avoiding the impact of any rate hikes during the new term. It is so attractive a strategy that some homeowners are taking on penalty fees to end their terms early and allow remortgaging at current rates rather than facing possible higher ones when their term is scheduled to end.

Rates are certainly higher than they were two or more years ago when many homeowners last obtained a deal. However, today’s rates are likely to be lower than what will be available at the end of the year or into next year.

Inflation is not expected to come under control until middle or later of 2023. That could mean many more interest rate hikes by the MPC. The last seven consecutive meetings have resulted in rate increases. The last two meetings the rate hikes increased from 0.25% to 0.50% and there had been expectations that the latest meeting would result in a 0.75% rather than the 0.50% that occurred. 

There is not a scheduled MPC meeting until November and another in December. This allows homeowners the time to shop for a remortgage and discovery what savings and relief is available. Shopping online is fast and easy as it only takes going to remortgage lender websites to obtain a quote. Shopping with a remortgage broker could offer many quotes from a variety of lenders in which to review and compare. Brokers could also have exclusive deals, so it is certainly a consideration when gathering quote opportunities.

There is no reason to pay more and strain a household budget when there are possible savings with a remortgage. It could help not only save against a SVR, but against any possible increases ahead with a fixed rate remortgage choice. While savings are the main focus, a remortgage could also offer peace of mind as we head into an economic environment not seen in many decades.