Interest rates are much more expensive for borrowers than they were two years ago, and unfortunately the cost of borrowing is going to get more expensive. The Bank of England’s Monetary Policy Committee (MPC) is fighting inflation by raising interest rates. In simple terms, if it costs more to borrow money, people will spend less, demand will drop, supply will grow, and prices will reflect the drop in demand. It will help the economy overall, but meanwhile those that must borrow are put in a tough position while the MPC is working on inflation.

The Bank’s target rate for inflation is 2.0%. The latest inflation report, though it did reveal a decline in inflation, left the rate still more than three times the target rate at 6.8%, which means there are likely more interest rate increases by the MPC to come before inflation is closer to target. The forecast is for inflation to reach the target in early 2025.

The first move by the MPC to fight current inflation occurred in December 2021 when the historically low standard base interest rate was almost zero due to the global pandemic. The MPC met and raised the rate from 0.1% to 0.25%. During each consecutive meeting of the committee through to August 2023, the rate has been increased. It is now at 5.25%, which is the highest it has been in fifteen years. 

The interest rates of borrowers that secured loans two years ago will have been or near historically low offers from the lenders themselves. This includes home buyers that secured deals when the housing market was booming with buyers due to cheap borrowing despite average house prices growing to break record highs month after month.

Those that secured two-year fixed deals that are coming to an end this year will be leaving behind their cheap interest rate deals and will face a new rate. Their debt will be associated with this new rate to determine the cost of their borrowing and their repayments. Those that secure a remortgage, despite not having the choice of lower rates than what the homeowner was previously paying, could save money.

When a homeowner comes to the end of their mortgage term, they can either remortgage or allow the lender to move them to their standard variable rate (SVR). The remortgage is normally the choice to take as it will have the lower interest rate in comparison to a SVR, which could be double or more the offering with a remortgage deal.

More money could be saved by avoiding further rate hikes, which a remortgage can also offer by giving the homeowner the choice of a fixed rate deal.

Avoiding a SVR and choosing a fixed rate to avoid future rate hikes saves the homeowner money by helping them avoid paying more than necessary. 

Shopping for a remortgage can be done online. It is fast and easy to do online and can be done at any time since websites can be accessed around the clock. In mere minutes after answering a few questions, a homeowner could have a quote in hand. Going from website to website of remortgage lenders will allow the homeowner to gather quotes. 

However, a quick and perhaps better option for some homeowners would be to shop online with a remortgage broker. Brokers work with many lenders on behalf of the homeowner’s needs for a new deal. Visiting a broker website could put numerous quotes from a variety of lenders in hand to review and compare in minutes. Also, brokers could have deals from lenders not offered directly from the lender to borrowers. 

Once quotes are in hand, the homeowner is able to determine what opportunities are available. 

Shopping for a remortgage now is a smart strategy as the optimistic report on inflation declining has some lenders cutting their remortgage interest rates despite the last increase by the MPC and the expected increase due in September. Others are cutting deals in order to gain the attention of the many homeowners seeking a remortgage, because due to higher rates the demand from home buyers is slowing.

Any time is the perfect time to shop for a remortgage for a homeowner seeking out an opportunity to save or secure peace of mind for their household budget. With lenders cutting rates due to a more competitive market in lending, and with more rate hikes by the MPC on the way, those coming to the end of their deal, those already on a SVR or other variable or tracker deal, and those seeking to build an early strategy before their deal expires, there is no time like this weekend to remortgage shop online and discover what opportunities await.