Interest in remortgages likely to drop

Homeowners are, on the whole, less likely to consider looking for a remortgage, as it seems an imminent rise in the base rate is also less likely.

So says the Council of Mortgage Lenders (CML): 'Looking ahead, interest in remortgaging is now also likely to be less pronounced, as expectations of higher interest rates this year recede.'

At the June meeting of the MPC (Monetary Policy Committee - the group that decides when to change the base rate), it was decided to keep the base rate at its all-time low of 0.5% for the 27th month.

Remortgages

The rate fell to that level on March 5th 2009, having plummeted from 4.5% just five months earlier. Since then, many experts have argued that the rate should rise, including members of the MPC itself - most notably Andrew Sentance, who has recently left the MPC.

However, the arguments against raising the rate have so far won out. A rise in interest rates could have a serious impact on all kinds of areas. In particular, as far as millions of homeowners are concerned, it would lead to an increase in the monthly cost of repaying their mortgage.

The reduction in their available spending money would obviously have an impact on spending in the high street, something which the economic recovery is largely dependent on.

Among those who'd like to see a rise in the base rate, meanwhile, are many of the savers who are seeing much smaller returns on their savings these days.

Then, of course, there are the people who have both savings and a variable-rate mortgage...