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%.
The latest forecast report on inflation came from the Office of National Statistics (ONS) and revealed the fall of petrol costs has stalled expected growth in the month of August. The expectation was for inflation to grow to 10.2% which would be an increase over July’s level of 10.1%, however it was reported at 9.9% annually. This news should come as a bit of relief to those concerned about the Bank of England’s Monetary Policy Committee (MPC) perhaps pushing the standard base rate up by a significant increase.
Homeowners are showing a strong demand for remortgages. According to experts, it is a good sign that many will have found a safeguard for their financial situation in some way either big or small, but at least they have taken a strong step in weathering what could be a hardship. Despite the demand in remortgaging, there are many homeowners that either do not understand what a remortgage is, or they have a misconception of what it does. Polls are taken when rates are on the rise, and it never fails to reveal there is a lack of knowledge when it comes to the benefits of a remortgage.
Before the passing of The Queen, the Bank of England’s Monetary Policy Committee (MPC) had been scheduled to meet this week on the 15th. The meeting would have likely resulted in an increase in the standard base interest rate. As would be expected, the meeting has been postponed until the 22nd due to the mourning period. Much will be postponed as the Nation adjusts to the shocking news of loss of the Queen. The distraction will likely impact even the smallest of concerns, including business processes, and the activity of borrowers and home buyers.