In an expected move during the Bank of England’s Monetary Policy Committee (MPC) meeting on Thursday, the standard base interest rate was increased to 1.0%. It is now higher than it has been in over a decade and has risen from nearly zero at 0.1% in December to ten times higher at 1.0% in less than six months. These quick increases are likely to add further financial hardship on many household budgets already impacted from the pandemic, inflation, interrupted supply chains, and higher energy and food costs.

The Bank of England’s Monetary Policy Committee (MPC) will be meeting this week to determine if the rising rate of inflation warrants another interest rate hike. The MPC has raised the rate during the last three consecutive meetings held in December 2021, February, and March. The rate during that time has moved from 0.1% to 0.75%. The odds are in favor of another rate hike and in doing so the MPC will have raised the standard base interest rate to the highest level in 13 years.

The UK housing market is still booming. It is stable and showing slight growth, but there are signs that it is slowing. It would be an expected outcome due to the rise in the standard base interest rate set by the Bank of England’s Monetary Policy Committee (MPC) during the last three meetings. No longer is the base rate sitting near zero making borrowing highly affordable. It could still be considered low at below 1.0%, but in comparison to what had become an expected norm for many homeowners, it isn’t low at all and could become quite uncomfortable for some household budgets.

When homeowners reach the end of their mortgage term, they have the opportunity to remortgage. Should they choose not to remortgage, they will be moved to their lender’s standard variable rate (SVR). This can be a risky situation due to the fact that a SVR rises and falls at the direction of the lender and at times when rates are rising it could catch a homeowner unaware. One day the repayment is affordable, then it increases, and if it does so several times it could cause the homeowner to face financial difficulty and leave them with few options to make it out of the hardship.

Many homeowners are facing higher repayments if not soon then in the near future. Interest rates are rising and it could be that rates will rise toward levels not seen since the economic crisis over a decade ago. The rates are increasing due to inflation rates not seen in 40 years and they’re not expected to come down quickly. Therefore, borrowers are going to be facing more expensive borrowing for a time.

It is the time for homeowners to shop for a remortgage. It’s been years since the threat of rising interest rates have been so ominous. At the start of December last year the interest rate was at almost zero and at an over 300 plus year historic low of 0.1%. Due to inflation, the Bank of England’s Monetary Policy Committee (MPC) hiked the rate and much earlier than had been expected as the forecast had been for the first quarter of 2022 by many experts. It would not be the last hike rate as more occurred and it is now at 0.75%.