Interest rates have risen substantially in the last two years, and for home buyers it has made the decision to enter the housing market one that needs more consideration. Not only has borrowing become more expensive, but house prices remain elevated from their steep climb during the pandemic induced housing boom. While buyers can choose to engage with the current rates, homeowners do not have the option for they must face current rates when their mortgage term ends. Their choice rests in being moved to their lender’s standard variable rate (SVR) or to choose a remortgage. Either way, when rates have risen, the new rate is likely going to look and cost very differently than the rate they were used to paying.

When a homeowner’s mortgage term ends, their deal ends. For instance, in 2022, one of the most popular mortgages was a two-year fixed rate loan. Rates of 2022 were much different than they will be for a homeowner in 2024. The end of 2021 was the start of 14 consecutive meetings of having the rate hiked by the Bank of England’s Monetary Policy Committee (MPC). It was in December 2021, the MPC voted to leave behind the historically low rate of 0.1%. The rate was hiked to 0.25% and remained until February 2022 when the next meeting increased the rate again. 

In February 2022, the Bank’s rate was 0.50% as the MPC voted to double the rate from 0.25%. The current base rate is 5.25% and February 2024 will be the first MPC meeting of the year. While the current rate could be the peak rate, the MPC has stated that there could be the need for another rate hike should inflation remain stubborn.

Homeowners took notice of the rising base rate in 2022 and not only did those that needed to remortgage do so, but there were homeowners that chose to take on a penalty to end their deal early which allowed remortgaging at the then current rates.

The rates would continue to rise, but homeowners remortgaging with a fixed rate deal shield their financial budget from the growing borrowing costs. That is until their mortgage term ends, and for many it will be next year.

It is true that the Bank’s rate is now 5.25%, but due to the lack of demand in borrowiing, which has created a competitive lending market, there are some lenders’ deals below that of the base rate. 

During the last meeting of 2023, the MPC held the rate steady for the third straight meeting, but there were members that voted for a rate hike. There were also statements from members reminding that should inflation slow its downward trajectory toward the target rate of 2.0%, the MPC would increase the rate again.

There is no guarantee that the rate is indeed at the peak rate, nor is there a guarantee that lenders will stay in a competitive mode and keep their rate offerings near the base rate. The only sure thing is that there are homeowners coming to the end of their mortgage term that will need a remortgage to keep from paying more than necessary.

Choosing a remortgage and avoiding the transition to the lender’s standard variable rate (SVR) could save the homeowner a substantial amount of money as well as offer them the chance to lock in their chosen rate with a fixed rate deal.

Knowing what deals are available is simple and quick by shopping online for a remortgage. Going to the website of a remortgage broker could put numerous quotes from a variety of lenders in the hands of the homeowner in a matter of minutes. Also, brokers could have exclusive deals from lenders not offered directly to borrowers. 

With quotes in hand to review and compare, the homeowner has the ability to set a strategy in place to choose the best remortgage deal and save money over moving to a SVR, and according to experts finding savings this year will be important for households in 2024.

It is important to note that remortgage activity has declined according to recent reports. This could be homeowners busy with the approaching holidays, while others may be holding out for hope in the possibility of a rate cut by the MPC. Homeowners could be missing out on the opportunities available and therefore be paying more than necessary by not remortgaging. 

Starting out the new year with the intention to save could be put into action by simply shopping for a remortgage online, anytime, anywhere, so long as it happens sooner rather than later to take advantage of the competitive rates available now.