Homeowners Should Consider a Remortgage Now Before Lenders Change Their Minds

Homeowners Should Consider a Remortgage Now Before Lenders Change Their Minds

Homeowners are seeking remortgages and they are doing so to save money despite higher interest rates. When a homeowner’s mortgage term ends, they lose their current deal and must seek a new one. That is why remortgaging is important and why now experts are encouraging homeowners to take time to shop for a new deal. Homeowners at the end of their term have the choice between a remortgage or they can allow the lender to move them to their standard variable rate (SVR). Avoiding a SVR is usually the better strategy, as it is normally a higher interest rate and therefore more expensive borrowing than the rates offered with remortgages.

While current interest rates offered by lenders are higher than they were when homeowners chose their deal two or even five years ago, there are savings to be found by choosing a remortgage over a SVR. Also, more savings could be realized by shielding further rate hikes with a fixed rate remortgage.

In the next few weeks, the Bank of England’s Monetary Policy Committee (MPC) will meet and the outcome will likely be another increase to the standard base interest rate. It will be the fifteenth consecutive meeting with a rate hike if it occurs. Experts are forecasting another 0.25% like the rate hike in August, while others expect an increase of 0.50% like in June. 

A larger rate hike was voted for in June when there was not a meeting the following month. In July, there was not a meeting and instead the next one followed in August. The same scenario is setup for September, with no meeting following the next month in October. The final three meetings of the MPC in 2023 are going to be in September, November, and December. 

The higher of the rate hikes could be voted on by the MPC. Despite inflation declining, there are factors such as higher wage earnings, that could enable inflation to stick or even reverse and climb if the MPC does not stay focused on the duty at hand to tame inflation and bring it closer to the target rate of 2.0%.

While the MPC meeting on 21 September could bring a rate hike, the lending market is experiencing a shift in itself. Lenders are seeking the attention of borrowers. Many are walking away from the housing market, including landlord investors. Fewer are borrowing as it has become more expensive. To be more competitive, lenders are offering more attractive remortgage offers, including lower interest rate offers despite the MPC increases and expected increases to come.

However, the expected cuts in rates this week from lenders might not last long. It will depend on the vote of the MPC on the 21st and the meeting will not have to commence for lenders to respond. Sometimes, they will make changes to their rates prior to the MPC meetings in anticipation of their vote. Also, if demand increases heavily with the new rate offers, lenders could pull their new lower deals quickly and make changes in their offers. 

The length or shortness of the new offerings expected this week from lenders puts in place an unexpected opportunity to save more. Homeowners are being encouraged to take advantage of this unique moment and shop for a remortgage sooner rather than later. Even those with time left to their mortgage term might consider shopping early. While it isn’t the right choice for all homeowners, some could choose to take on a penalty fee to end their term early and remortgage at current rates.

Others, those already on a SVR or nearing the end of their term, should consider shopping for a remortgage now. 

It is easy to shop for a new deal online. It is fast and simple. The quickest way to gather quotes to review and compare is to shop with a remortgage broker. Visiting the website of a broker could put numerous quotes from a variety of lenders into hand to review and compare in only minutes. Brokers could also have exclusive deals from lenders not offered directly to borrowers. Homeowners could also go website to website of remortgage lenders to gather quotes.

The unique lack of demand in today’s borrowing is creating a competitive lending environment. It could last for days, until the next MPC meeting, or perhaps longer, but it will likely end as demand increases and the MPC votes for a higher rate. 

The time to remortgage, at least shopping for one and discovering the opportunities available, is now, and it should be sought out before lenders change their minds and shift their rates upward, again.

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