Just as warnings were starting to be handed out to homeowners seeking a remortgage that the interest rate would be increasing sooner rather than later, the Bank of England’s Mark Carney doused the rising gossip with cold water stating that rise in the interest rate when it does occur will be “limited and gradual”.  He stated that there are other market tests besides the housing market that will trigger a rate increase.

In a statement to the Treasury Select Committee (TSC), Carney said, the standard base rate set by the Bank of England in five years’ time would be below the historic average of 5%.  The base rate has not been changed since March 2009 and sits currently at the historic low level of only 0.5%.

Carney’s easing of the news of an impending rate change following the recent release of the Bank of England’s Monetary Policy Committee’s June Meeting Minutes showing indication that promoted a forecast of the rate changing in late 2014 seemed contradictory.  One TSC member, Labour MP Pat McFadden, stated that the Bank’s shifting positions towards the rate change was like an “unreliable boyfriend – one day hot, one day cold”.

TSC member and Labour MP Pat McFadden said the bank's shifting position on rates was like an "unreliable boyfriend - one day hot, one day cold".

It is uncertain how homeowners will read the changing stance on the possibility of a rate change.  While there may not be a rush to head out to switch to a new remortgage deal as there are currently very attractive deals available there is the need to take into consideration that the remortgaging process is lengthier.  The new Mortgage Market Review which puts into place new guidelines for borrowers requires more detailed information on a homeowner’s savings and spending habits to qualify for a loan as well as the ability to pass a financial stress test which is used to indicate the borrower can afford a loan when interest rates increase.

According to the British Banker’s Association (BBA), the number of homeowners that remortgaged in May decreased by 11% from April.