On May 10, the Bank of England’s Monetary Policy Committee (MPC) will be meeting to discuss the state of the economy, inflation, and whether another increase is needed for the standard base interest rate. Depending on which way the wind blows on a particular day, the expectation is for further rate hikes due to inflation still residing in double digits or for rates to drop due to the strain on household budgets. All will be known in just a few weeks and the outcome either way will have an impact no matter what. For the truth of the matter is homeowners are facing higher rates than they did not long ago.

The Bank’s target rate for inflation is 2.0%, but with inflation slightly above 10.0%, over five times the target, more interest rates will likely be needed. There is no strong consensus on whether the rate will be hiked this month or allowed to sit steady. The MPC could be determined to take an aggressive stance on inflation, which has taken a toll on households, or offer borrowers relief and take a more passive stance toward a slow and steady fight against inflation. 

The MPC increased the base rate in March to 4.25%. It was the eleventh consecutive meeting in which the rate was hiked, and no meeting was held in April. It began in December 2021 when the rate was almost zero at 0.1%. The rate is now the highest it has been in over a decade. If the MPC votes for the rate to increase by another 0.25% it will go to 4.5% which would equal the highest it has been since October 2008, which was amid the financial crisis breakdown.

There are many experts that believe an increase in the base rate is needed and will tip the flow of inflation toward a downward path. 

A higher base rate will be difficult for borrowers, but dropping inflation would be good for all consumers.

Borrowers are being told to prepare for higher rates should they occur. There is great concern for homeowners due to the fact that thousands are coming to the end of their mortgage term chosen when the Bank’s rate was at the historic low of 0.1%.

Two years ago, lenders were also offering their historic lowest rates. Homeowners obtained mortgage rates that were amazingly affordable. For some, it was the interest rate that made their purchased property possible. Two years have passed, and for those that chose two-year fixed rate deals mortgage terms are ending. Interest rates look different and the fixed rate that has shielded them against rising rates will be gone.

The interest rates homeowners had to choose from two years ago are gone. Even if inflation moves downward, the historic low level of interest rates is not likely to occur again. Borrowers are going to have to choose from rates of today and it could mean having to choose from a rate double or more what they were used to paying. That could equate to paying hundreds of pounds more per month.

For homeowners at the end of their mortgage term, there is a choice that could make a difference. When a term ends, there is the choice to either remortgage or allow the lender to move the loan to their standard variable rate (SVR).

A remortgage normally offers lower interest rates, and with a remortgage a fixed rate is possible. Therefore, savings could be found by making the choice of a remortgage over a SVR.

Shopping for a remortgage is also helpful in saving money. By shopping for a remortgage, a homeowner could find the best offer for their needs rather than accept the offer from their current lender.

Luckily it is easy to shop for a remortgage by doing so online. Visiting a remortgage broker website could put numerous quotes from a variety of lenders in the homeowner’s hand to review and compare in a matter of minutes. Brokers also are known to have exclusive deals that lenders do not offer directly to borrowers. Of course, a homeowner could visit the websites of remortgage lenders to gather quotes one by one to review.

By shopping for a remortgage, a homeowner is seeking the best deal for their needs. It might be the lowest interest rate on top of the shopping priority list, it might be a fixed rate deal, or it could be releasing cash from built up equity. The needs of homeowners are unique and there are remortgage deals to help each one, and because it is so easy to shop for one online finding the best remortgage is easy to do.

Homeowners are encouraged to not wait until their mortgage term ends, as they could shop early. Those that have already moved to a SVR are certainly encouraged to shop for a new deal. There is still time before the next MPC meeting and even if there is a rate hike or not, a remortgage is going to be a smart strategy for homeowners.