As feared, lenders have continued to show their risk in lending by hiking mortgage rates. According to Moneyfacts, the average two-year fixed mortgage rate is now the highest it has been since 2008 at 6.66%. It is an increase from the average of 6.63 reported on Monday. This is difficult news for homeowners coming to the end of their mortgage terms soon or those that have already and did not remortgage when they could have done so.

The Bank of England’s Monetary Policy Committee (MPC) met in June and raised the standard base interest rate to 5.0%. The increase surprised some experts as the jump was due to a 0.50% increase, and not the expected 0.25% increase forecasted. There were some that had predicted a 5.0% base rate due to there not being a MPC meeting in July and due to stubborn inflation which is still at more than 4 times the Bank’s target of 2.0%. With inflation reported at 8.7%, the MPC took a more assertive approach to fighting inflation and move it into a downward trajectory. The continued concern about inflation means there are expectations of more rate hikes to come.

Warnings have been issued for over a year to prepare for higher interest rates. It has been a bit of confusion for most homeowners as rates from lenders rose, fell, stuck and are now climbing again. It was the end of 2021 when the Bank of England’s Monetary Policy Committee (MPC) began increasing the standard base interest rate following historic lows due to the global pandemic. The first increase of thirteen consecutive MPC meetings that resulted in rate hikes took the base rate from almost zero at 0.1% to 0.25%. Now, a year and a half later, the base rate is at 5.0% after the June meeting hike of 0.5%.

The UK could be about to experience record temperature highs in the coming days. This summer has the makings of a record breaker overall as June recorded the highest average ever and July looks to be a repeat of scorching heat making relief hard to find. Homeowners are likely looking for ways to make their home more comfortable, and the means of doing so could be as simple as getting a remortgage. Not only could a remortgage bring the means of upgrading a home to better handle the heat, but also to battle the cold of winter and perhaps saving money overall.

Losing home buyers from the housing market would do more than just harm the goals of property sellers. The economy is strongly dependent on the UK housing market, and on a more personal level, so are homeowners, but not because they have become home sellers. Homeowners depend on their property values to obtain access to remortgaging. The better their ratio of loan to value, the less risk of the lender and the better remortgage deals available to the homeowner. Unfortunately, the forecast is for the current interest rates to keep homeowners away from the housing market, but according to Nationwide they are leaving slowly, if at all.

There is no doubt that a remortgage could be quite helpful to a homeowner in the current economic environment. This is especially so for those homeowners coming to the end of their mortgage term. Without a remortgage, they will be moved to their lender’s standard variable rate (SVR) and that interest rate could be double or more the level offered with a remortgage. Also, a SVR would put the homeowner at risk of rising rates while a fixed rate remortgage could shield the homeowner from any further rate hikes, and there are certainly more rate hikes expected in the months ahead.