Millions of homeowners have recently had their mortgage term end or are close to their term ending. Those that secured their loan only two years ago will have chosen from rates that were historically low but will now have choices from rates that are higher than in 14 years. If they do not remortgage at the end of their term, homeowners will be moved to their lender’s standard variable rate (SVR). Staying on a SVR could mean paying on a rate that could be double or more what might be found with a remortgage. Rather than pay more than necessary, homeowners are encouraged to shop for a remortgage and do so sooner rather than later.

Homeowners have been warned to consider a remortgage sooner than later. Those that allowed their mortgage term to end and did not remortgage were moved to their lender’s standard variable rate (SVR). Reports have shown that a SVR could be double or more the interest rate offered with a remortgage. In basic terms, the interest rate is the cost of borrowing. No one would certainly walk into a store and offer to pay more than double for an item when they could get it for less elsewhere. Rather than pay more than necessary, those on a SVR are warned to seriously shop for a remortgage, and so are those not yet on a SVR.

Last week the Bank of England’s Monetary Policy Committee (MPC) held their September meeting resulted in a vote to slow inflation by increasing the standard base interest rate to 2.25%. The 0.50% increase to take the rate above 2.0% is the seventh time the MPC has made a rate hike. The first increase in years occurred last December when the historically low interest rate of 0.1% was pushed to 0.25%. Including that meeting, seven consecutive gatherings have resulted in increases taking the rate to the highest level seen since 2008.

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%.

Homeowners are being encouraged to seriously consider a remortgage. Not only are homeowners facing higher interest rates, but they could soon be losing value on their properties. This could result in several different scenarios for property owners. Those that do not have enough equity built into their home could find themselves owing more money than their property is worth which is what they call “being underwater in a mortgage.” This could make it impossible to qualify for a remortgage and could push homeowners into paying more than would have been necessary had they remortgaged earlier.

The Bank of England’s Monetary Policy Committee will meet this Thursday. The meeting had been set for last Thursday but was postponed due to the death of Queen Elizabeth II. The MPC is expected to follow through with the planned Thursday meeting and experts are forecasting an even higher interest rate increase than last month. The first meeting that began the increases seen during the last six consecutive meetings was in December 2021 and took the historically low rate of 0.1% to 0.25%. All increases following were 0.25%, except for last month’s increase of 0.50%. The expectation is for the rate to be hiked by 0.75% this week which would take the rate over 2.0% to 2.50%.