Bank of England Expects Rate Hike to Bolster Lagging Economy
The first interest rate hike in a decade is expected to take place this week. The last base rate increase took place years ago in the midst of the economic crisis of 2007. Last year, the base rate was reduced from 0.5% to 0.25% in an effort to avert a recession following the surprising Brexit vote. Most expect a correction in the base rate to take place this week moving the rate back up to 0.5%.
Economists are concerned with what will follow the rate increase, as many homeowners will be experiencing a rate hike for the first time in their lives. With wage growth remaining a struggle, the adjustment to paying more for the monthly mortgage and other things could be a shock to their financial system. Some economists believe this will be the first of two rate hikes which will take place. The other is forecasted for May of next year.
As a rate hike sits primed and ready to be installed, homeowners yet to remortgage are weighing their options. There is still time to remortgage, as many lenders are still offering attractive deals with low rates.
Although the interest rate is a prime consideration whilst remortgaging, there are other factors to consider as well. Borrowers should do their homework and understand there are other admin fees involved. Often, there are fees for early payoff of a mortgage. There are also fees to close on the new mortgage.
Remortgage offers many benefits to homeowners including potentially cutting the cost of the monthly mortgage payment and fast access to cash.