When homeowners reach the end of their mortgage term, they have the opportunity to remortgage. Should they choose not to remortgage, they will be moved to their lender’s standard variable rate (SVR). This can be a risky situation due to the fact that a SVR rises and falls at the direction of the lender and at times when rates are rising it could catch a homeowner unaware. One day the repayment is affordable, then it increases, and if it does so several times it could cause the homeowner to face financial difficulty and leave them with few options to make it out of the hardship.

Many homeowners are facing higher repayments if not soon then in the near future. Interest rates are rising and it could be that rates will rise toward levels not seen since the economic crisis over a decade ago. The rates are increasing due to inflation rates not seen in 40 years and they’re not expected to come down quickly. Therefore, borrowers are going to be facing more expensive borrowing for a time.

It is the time for homeowners to shop for a remortgage. It’s been years since the threat of rising interest rates have been so ominous. At the start of December last year the interest rate was at almost zero and at an over 300 plus year historic low of 0.1%. Due to inflation, the Bank of England’s Monetary Policy Committee (MPC) hiked the rate and much earlier than had been expected as the forecast had been for the first quarter of 2022 by many experts. It would not be the last hike rate as more occurred and it is now at 0.75%.

The UK housing market has been robust since the first lockdown caused by the global pandemic. It had been thought that the market would face difficulty, and no one could have predicted that instead home buyers would rush into the market to buy a home better suited to a pandemic lifestyle. It happened that demand grew for property with more room, and that included room both inside and outside to better deal with the new lifestyle thrust upon the public. However, as vaccines became available and rising cases were no longer as big a threat, the demand for housing remained.

The Bank of England’s Monetary Policy Committee (MPC) has raised the standard base interest rate during the last three consecutive meetings. The cost of borrowing becoming more expensive each time the rate increased. Because of this, homeowners have been seeking to escape paying more than necessary by shopping for remortgages. Through a remortgage, not only could a homeowner discover a low interest rate in which to save money, but other benefits as well.

The UK economy is putting a strain on households. Inflation along with rising fuel and energy costs are taking money out of budgets that had already been strained due to the global pandemic. Experts are encouraging homeowners to take advantage of an opportunity they have to save money and build in a financial safety net against rising interest rates.