The demand for remortgaging has grown due to rising interest rates and the impact from inflation. To assist household budgets homeowners are seeking to end their mortgage term early to allow them to remortgage. Rather than wait until their mortgage term ends and possibly face higher interest rates, taking on a penalty fee and ending the term now allows them to choose from today’s remortgage offers. 

The Bank of England’s Monetary Policy Committee (MPC) has increased the standard base interest rate at each of the last six consecutive meetings. The first increase was in December 2021, when the historically low 0.1% rate was hiked a bit unexpectedly followed by five more increases. It had been forecasted that the first increase would occur in early 2022, but inflation grew rapidly and the MPC moved quickly to try to control it. This month, the sixth increase, the rate grew to 1.75% which is the highest in 14 years.

The UK housing market could be experiencing the cooling down experts predicted when the Bank of England’s Monetary Policy Committee (MPC) first began increasing the standard base rate. Since December last year, the MPC has met six times and during each meeting the rate has been hiked. It now sits at 1.75% after a 0.5% increase last week, the largest increase in 27 years. Due to the increase in interest rate offers with mortgages, home buyers could be turning their attention away from the market, but just as many could be having issues with affordability.

A day after the warning that inflation could reach an “astronomical” level of over 15% next year, the Bank of England’s Monetary Policy Committee (MPC) met for their August meeting and voted the standard base interest rate to increase by 0.50%. This is double the rate increase seen at each of the last four meetings this year that resulted in rate hikes of 0.25% and the largest increase in 27 years. The current base rate is now 1.75% and due to the warning about inflation all borrowers, homeowners and home buyers included, should be prepared for more rate increases over the coming months and into next year.

House prices have grown for twelve months in a row according to recently released data from Nationwide. July continued to see growth in the housing market despite higher interest rates, inflation woes, and continued rising house prices. The average house price was £271,209 with a recorded annual growth of 11%. Continued growth in the housing market is good news amidst a difficult economy.

After a standby month in which borrowers did not have to endure another rate hike, the wait is over. The 4 August, this Thursday, is the next Bank of England’s Monetary Policy Committee (MPC) meeting. The result of this meeting will determine not only the rate but the fate of millions of borrowers including homeowners. Those that are facing the nearing end of their current term will face different interest rate choices than before and it could determine their financial health and stability.