There are many homeowners that will come to the end of their mortgage term in 2024. When their term expires, they will either shop for a remortgage or they will allow their lender to transition them to their standard variable rate (SVR). Avoiding the SVR could bring savings as it is normally a much higher interest rate than found with a remortgage. However, there are unique circumstances this year and homeowners may be trying to create a strategy of wait and see. Interest rates are high, yet there are expectations of lower rates to come. Homeowners might believe a SVR is a good choice to wait out for rate cuts to the lowest interest rate remortgage, but they would be paying more than necessary with no savings to be found.

There are indeed higher interest rate choices for homeowners coming to the end of their fixed rate deal this year. Lender rates are higher than they were two or three or five years ago. Depending on when the homeowner obtained their fixed rate mortgage will determine how much of a financial shock they will endure when facing the lender rates of today.

The Bank of England’s Monetary Policy Committee (MPC) has left the standard base interest rate steady since last year at 5.25%. In June of 2022, two years ago, the base rate was increased to 1.25%. In June 2021, three years ago, it was 0.1%, the lowest it has been in the over 300 years of the Bank of England. 

Last year, there was no hope of the base rate dropping as inflation remained a constant financial stress. Instead, the forecasts were for doom and gloom and preparation for the rate to climb as high as needed to tame inflation and move it toward the target rate of 2.0%. The peak rate was reached in August 2023 and has been voted to remain at each following MPC meeting.

Now, as inflation is on the decline and closer to target at 2.3%, there will likely be a rate cut or possibly two this year. There are many considerations the committee will have in deciding to offer relief to borrowers with a rate cut, but the inflation rate is a primary one.

The MPC meeting in May was held before the inflation rate report was published in May. The next release of data will occur on the 19th of June with the MPC meeting the day after on the 20th. This means there will have been two inflation reports before the next MPC meeting. There are some experts that believe a majority vote for a rate cut might happen, but if it does it will likely be minimal.

The vote for the first cut to the base rate will likely be 0.25% taking the rate to 5.0%. The last time there was a rate cut by the MPC was in March 2020.

Homeowners waiting for a rate cut and hoping for much lower lender rates might be making the wrong choice. In bypassing a remortgage and choosing a SVR, each monthly repayment is above the cost a remortgage would offer. Take into consideration that amount each month until the MPC votes for a rate cut and the amount begins to add up. 

This is especially true since there are lenders that have already lowered their rates in anticipation of the MPC voting to lower the base rate sometime this year. The best lender rate to be found after the MPC votes for a cut could already be available.

Homeowners should also be aware that most experts believe the opportunity to hope for a rate cut in June has passed. The next possibility would be in August as there is not a meeting scheduled for July. 

There is only one way to discover what remortgage opportunities are available and that is to shop and it is easy and fast to do online. In visiting the website of a remortgage broker, a homeowner could quickly have numerous quotes from a variety of lenders and possibly an exclusive deal. Homeowners could also go from lender website to website to gather quotes.

Choosing to wait out the MPC voting for a rate cut could be a costly decision. There are attractive deals in remortgaging already available.