The death of Queen Elizabeth yesterday has brought great sorrow to our country. It has come at a time when her constant presence, strength, and character would be a solid example of resilience during challenging times. Now the economic hardships due to come in the near future will be endured under the guidance of her son, the newly named King Charles III. A new King, a new Prime Minister, and a new and unknown economic trial is ahead, and therefore it requires an even more keen focus on what preparedness could be done to best endure.

Homeowners are shopping for remortgages and experts believe that is a smart strategy. There might be substantial savings to be found for those that could benefit from a remortgage, especially one with a fixed interest rate. Those homeowners that have had their mortgage term end and failed to remortgage were moved to their lender’s standard variable rate (SVR). Borrowers moved to a SVR could be paying on an interest rate double or more that found with a remortgage. Not only could they likely find savings now, but even more later on as they would be saved from further interest rate increases. 

Rising interest rates are a concern to borrowers, especially home buyers and homeowners. The level of increases has been fast and aggressive in an effort to thwart inflation in the UK. The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base rate at each of the last six consecutive meetings. The first increase resulted from the December 2021 MPC meeting which ended the long standing historically low rate of 0.1%. In over 300 years there had not been a lower rate, and in six meetings the rate is now at the most expensive level for borrowers in decades.

Home buyers were still showing interest in the UK housing market in August according to a recent report from Nationwide. The August data revealed a 0.8% increase over July. The increase was far more than the slight growth of 0.1% forecasted by some economists. It should be noted that the annual comparison of 12 months to July resulted in a 10.1% increase which was a 40 year high. There could be even other record highs due to increasing house prices once further data reports are released in the next months.

According to UK Finance, there are approximately 430,000 homeowners on two-year fixed interest rate deals that will expire by the end of 2022. They would have chosen their interest rates when the Bank of England’s standard base rate was at an all-time historic 300 plus years low of 0.1%. The current rate is now 1.75%, which means their cost of borrowing is going to be much more expensive. 

In the last few days, the news concerning the grim forecasts for winter and the cost of heating have piled on one after another. Headlines sharing information as to nearly 25% of UK households are intending to not turn on their heat this winter to save money. Another headline spoke of possible homelessness due to the cost of heating and the inability for households to afford not only food, and heating, but even fuel for transportation to work. Due to the many factors impacting the economy and household budgets, experts are once again encouraging strongly for homeowners to shop for a remortgage for possible assistance.