For Homeowners Economic Uncertainty Ahead Requires Preparation Now

For Homeowners Economic Uncertainty Ahead Requires Preparation Now

The death of Queen Elizabeth yesterday has brought great sorrow to our country. It has come at a time when her constant presence, strength, and character would be a solid example of resilience during challenging times. Now the economic hardships due to come in the near future will be endured under the guidance of her son, the newly named King Charles III. A new King, a new Prime Minister, and a new and unknown economic trial is ahead, and therefore it requires an even more keen focus on what preparedness could be done to best endure.

A recent report was released that homeowners will likely see a reduction in their disposable income by double digits due to the loss of their fixed rate mortgage that will soon end.

There are over a million homeowners that are due to have their mortgage term end in the next six months. It will either require a remortgage or they will be moved to their lender’s standard variable rate (SVR). A SVR could be attached to an interest rate level that is double or more the level found with a remortgage. That is precisely why experts encourage ALL homeowners to shop for a remortgage to determine what opportunities to save are available.

While this time last year homeowners were encouraged to remortgage due to the ability to likely find a lower interest rate than what they were paying previously, it is now encouraged to allow them to secure an interest rate available now versus paying more in the weeks or months ahead. It is very unlikely that a homeowner coming off of an ending mortgage term would find an interest rate lower than they had previously. The cost of borrowing has gotten more expensive and continues to be so with each interest rate increase.

In December of last year, the Bank of England’s Monetary Policy Committee (MPC) issued the first standard base interest rate increase in years. The rate had been reduced to an over 300 year historic low due to the global pandemic. The 0.1% rate was no more as of December 2021, and it has been hiked during each of the six consecutive MPC meetings, including last month’s meeting which resulted in the largest increase in almost three decades. The MPC increased the rate by 0.50% which took the standard base interest rate to 1.75%.

Borrowers, of course, will face rates higher than the MPC’s set rate. The average is likely to be double the Bank’s rate for fixed rates and the longer the term chosen the higher the rate secured. Longer term fixed rate remortgages are popular with homeowners currently. Though the much higher rates offered are shocking at first, they are by terms of what was normal before the Financial Crisis certainly attractive.

Homeowners on SVRs, it should be noted, are paying much more than the rates offered with a remortgage, and there is not guarantee they won’t continue to pay more with each rate increase by the Bank. Experts continue to warn of not taking advantage of remortgage offers as soon as possible. In fact, some homeowners are paying penalty fees to end their mortgage term early to choose a remortgage now instead of facing rates when their term would end.

Many homeowners are taking no risks in what could happen in the months and years ahead with interest rates and are securing a longer-term deal with the rates offered now versus facing any further increases for years to come.

The outlook for household budgets is less than optimistic. There are many factors causing issue and making it almost impossible to firmly predict how difficult enduring the economic issues will be and for how long it will be required. Rather than going into it ill prepared, experts are trying to get information out that will help individuals take action to bring some security where possible.

Shopping for a remortgage could indeed be a smart strategy to take for homeowners. It is easy and quick to shop for quotes online. In minutes, a homeowner could have a quote in hand by visiting a remortgage lender website. One after another will reveal more quotes and opportunities available. Reviewing quotes side by side will reveal the different benefits available and help a homeowner discover not only possible savings now before costs get more expensive, but also offer savings against any future rate hikes should they choose a fixed rate remortgage.

Homeowners should be aware that visiting the website of a remortgage broker could be helpful. They could offer many quotes from a variety of lenders in which to compare. Remortgage brokers could also offer exclusive deals from lenders not offered directly to borrowers. Knowing they will be offering quotes along with other lenders through a broker, it could push the lender to be more competitive in their offers than required on their own site which would result in the exclusive deal.

There is no obligation in shopping for a remortgage online, it is simply a quick and effortless way to gather information to consider and perhaps discover a bit of a financial safety net for the days ahead. No one should want to pay more than necessary, and for homeowners that have had their mortgage term end or have one close to ending, shopping for a remortgage sooner rather than later could be a smart move.

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