Homeowners are facing higher repayments as the Bank of England’s Monetary Policy Committee (MPC) voted on Thursday to raise the standard base interest rate another 0.5%. In the start of December 2021, the base rate was at almost zero having remained steady for the entire year at 0.1%. Inflation growth pushed the MPC to raise the rate for the first time since the pandemic had taken hold and lockdowns began. The first increase raised the rate to 0.25% and further rate hikes during the last nine consecutive MPC meetings this year will close out the rate at 3.5%.

The latest data on inflation revealed the deepest rate of decline in the last 16 months as it fell to 10.7% in November from October’s 11.1%. It is still far from the Bank of England’s Monetary Policy Committee (MPC) set target rate of 2.0%. Therefore, Thursday’s December meeting of the MPC is still likely to bring another increase in the standard base rate of 0.5%. The rate will become 3.50% to close out the year with the ninth consecutive meeting of the MPC that resulted in a rate hike.

The week of the December meeting of the Bank of England’s Monetary Policy Committee (MPC) has arrived. The meeting will be held on the Thursday, 15th, and will likely end with another increase to the standard base interest rate. The MPC has raised the rate during each of the last eight consecutive meetings and it now sits at 3.0%. December 2022 is expected to end with the base rate at 3.5% which is remarkably higher than it was last December when the rate was first hiked from an all-time low of almost zero at 0.1%.

The UK housing market is feeling the pressure from higher interest rates. As the Bank of England’s Monetary Policy Committee (MPC) began hiking the standard base interest rate last December, hopeful home buyers remained. Many were taking the opportunity to buy before rates grew higher and thus more expensive. Since the first increase, the base rate has risen from almost zero at 0.1% to 3.0%. The action by the MPC is meant to put a halt to the growth of inflation, and that could take months into next year which means more rate hikes to come.

Despite rising interest rates, there is some good news for homeowners. Some lenders have reduced their interest rate offers. When the mini budget was announced in late September the markets reacted, including the lending market. Lenders raised interest rates in reaction and pulled their lowest offers. It left hopeful home buyers facing paying more and some facing affordability issues to the point of pulling out of purchasing deals. Homeowners with variable rates faced higher repayments and those that sought remortgages saw the best offers disappear overnight.

Rising interest rates have created a sense of urgency for homeowners to learn all they can about remortgaging. It is an often overlooked opportunity when interest rates are low, as they have been for a few years. However, when rates are rising, it certainly should be on the top of every homeowner’s priority list to shop for a remortgage deal and determine what benefits could be available to save money.