When Would Be The Right Time To Remortgage To Make The Most Of Base Rate Rises?

Most of us are very well aware of the impact that the recent recession in the UK

has had on the property and mortgage markets, and how it has been extremely difficult to obtain finance for property purchases and remortgages.

But it now looks as though things are set to change in the near future. With the economy beginning its sluggish recovery, and inflation spiraling almost out of control, the Bank of England looks as though they have only one choice.

So, with interest rates set to rise, is it the right time to consider remortgaging your home? To help you decide, we've looked at the Base rate over the last twenty years. In April 1991, the Bank of England Base rate stood at 12 per cent. By 2001 it had fallen to 5 per cent, before reducing again to 2011's record low rate of 0.5 per cent.

The Bank of England base rate is what drives the rates of the banks on the high street; who are generally also the main mortgage lenders. So with the base rate being low for so long, it has been a great time for those in a position to borrow to do so. But even so, lending became tight due to the banks being reluctant to put themselves at further risk, so new borrowers were often turned away.

The Monetary Policy Committee of the Bank of England had a vote earlier this year, and the majority vote was to leave interest rates as they were for the time being. However, it is now thought that interest rates will be increased later this year due to inflation rates at almost 4%.

But it is difficult to judge how high the interest rates will go. It is unlikely that they will increase very quickly, as this would be unstable and could result in more issues than it would solve, so the likelihood is that we will see a 1% increase over the year, with further increases over the next 3-5 years.

Another compelling reason to consider switching your home loan now is that lenders seem to be gradually regaining their appetite for remortgage lending. Obtaining a mortgage over the last couple of years has been tough as banks and building societies tightened their lending criteria, but there are signs that the market is opening up once again.

According to various sources, since February 2011, there has been an increase of one fifth on remortgage lending, so it is advisable to take advantage of the increased lending before interest rates go up, so that you can make the most of the lowest deals available on the market while rates are still relatively low.

It is also perfect conditions at present to remortgage if you are thinking of doing home improvements or planning on starting your own business, as you will be getting the most for your money in the current market conditions, so your business would be able to grow more quickly than if interest rates were higher.

So the answer really is yes. Now is a good time to remortgage before interest rates are hiked. This can help you to avoid paying unnecessarily high levels of interest on your mortgage now and in the years to come. Make sure you shop around, as the market place is extremely competitive, and get advice if you're unsure about any part of the remortgage process.

by: Howard Ogollegos

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