House prices were not supposed to be the sole reason for an interest increase by the Bank of England’s rate but if the housing market continues to show signs of a possible market bubble it might indeed have to occur.  Regardless, there are already warnings that the Bank’s Monetary Policy Committee (MPC) is likely to raise the rate by the end of the year or in the beginning of next year.  “Sooner rather than later” is the common call for the hike and those that could be impacted should take notice and begin seeking out a remortgage say experts.

Those on their lender’s standard variable rate (SVR) are at the highest risk since they could experience a rather quick interest rate hike should their lender see the need to raise their rate and it could occur independently of the Bank’s MPC decision.  Unless a budget can handle an unexpected rate increase then safety should be sought with a remortgage deal.

Many homeowners may be totally unaware that the low interest rate they are now connected to occurred when their current mortgage deal ended.  Most may have been happy to see a lower rate on the SVR but lie in risk should the lender begin raising their rate.  Since remortgage deals take more time than they used to it will be important to begin shopping around so that there will be plenty of time to gain approval.  The new Mortgage Market Review which was put into place to keep borrowing responsible requires borrowers share intimate information on their spending and saving habits for the lender to confirm they can afford their remortgage and they must also clear a stress test to indicate an increase in the interest rate will not cause a problem.

Homeowners should keep an eye on the level of house prices for Mark Carney recently told MPS that the increasingly high levels of mortgage debt could overstretch borrowers and put the UK back into a recession if house prices are allowed to continue to climb.