Remortgage demand is due to see continued increase with the warnings that the Bank of England’s Monetary Policy Committee (MPC) will soon be increasing the standard base rate from its low 0.5% level.  The rate has gone unchanged since March 2009.  Economists differ on their forecast as to when the change will occur such as the end of this year or in the beginning of next year.  Nevertheless, it is going to change and the change is due to be slow and steady over many months depending on economic growth.

Lenders are preparing for the high demand and are already tightening their lending policies and will likely soon start to remove their cheapest remortgage deals from their offers.  As with any business, as demand increases supply will dwindle and the cost will increase.  So it will be with lending.  The cost of borrowing is about to become more expensive.

Homeowners should be forewarned that the process of gaining a new deal will take more time than in the past.  New guidelines for lending put into place by the Mortgage Market Review require extra steps of the homeowners seeking to borrow.  They must share more intimate details on their spending and saving habits to show that they can truly afford the loan for which they seek.  Their financial health must also undergo a stress test to show they can also handle any increases to the interest rate in the future.  These and other requirements will take time to complete with the lender before being approved for a new deal.

Homeowners that believe a remortgage could be helpful in saving money and want to grab a current low interest deal should take into account that timing will be important and patience will be required.