The latest data on inflation revealed the deepest rate of decline in the last 16 months as it fell to 10.7% in November from October’s 11.1%. It is still far from the Bank of England’s Monetary Policy Committee (MPC) set target rate of 2.0%. Therefore, Thursday’s December meeting of the MPC is still likely to bring another increase in the standard base rate of 0.5%. The rate will become 3.50% to close out the year with the ninth consecutive meeting of the MPC that resulted in a rate hike.

Last December, the base rate was almost zero at 0.1%. It was the December 2021 meeting of the MPC that began the first of the rate hikes and borrowing became more expensive with each meeting that followed.

Homeowners have been encouraged by experts to shop for a remortgage to find financial relief from the impacts on their household budget from the current economy. Not only is inflation taking a toll, but energy costs are higher, and some budgets are still in recovery mode from the global pandemic.

The most expensive impact of higher interest rates could be on homeowners, and they could be caught unaware as to how much more costly their repayments could become.

There are many homeowners coming to the end of their mortgage term that had secured their interest rate when they were historically low. At the end of their term, a homeowner will either remortgage or be moved to their lender’s standard variable rate (SVR). Choosing to skip the opportunity to remortgage could be costly.

A SVR is usually attached to interest rate levels higher than what is available through remortgaging. There is also the issue of the rate being variable which means it will change and during times when rates are rising it could be quite the risk to a household already subject to other financial strains.

The option of remortgaging could secure a set rate for the duration of the new term if a fixed rate remortgage is chosen. It not only could save the homeowner from the possibly higher rate of a SVR but offer a shield from further rate hikes throughout the term. The savings could be substantial for a homeowner and especially helpful when any savings would be helpful.

It is quick and simple to shop for a remortgage online to determine what savings opportunities are available. Visiting the website of a remortgage broker could put several quotes from a variety of lenders in hand to review and compare in a matter of minutes. Brokers often have exclusive deals from lenders not offered directly to borrowers. A homeowner could also visit websites of remortgage lenders to gather quotes one by one.

By obtaining remortgage quotes, a homeowner could discover what savings opportunities are available, not only now, but also into the future. Some homeowners are choosing to pay a penalty fee to end their term early to remortgage with current interest rate offers rather than wait out their term and possibly face higher interest rates when their term was due to end.

The Bank’s current base rate is 3.0% and is expected to rise to 3.5% tomorrow. Experts are forecasting the rate will need to rise to at least 5.0% next year to bring inflation under control. There is no indication that rates will then lower as it could be necessary to allow the higher rate to sit to maintain control on inflation. 

The outlook is for rates to rise further, and borrowing will be even more expensive than it is now. Rather than accept there will be less money in the budget, savings should be sought, and for homeowners a smart strategy could be to start with shopping for savings with a remortgage.