As expected, the base rate has been held at 5.25% following the review held by the Monetary Policy Committee (MPC). This is the seventh consecutive time it has been held at this rate. Although inflation has finally reached the Bank of England’s 2% target, caution is still being exercised to keep inflation under control. The main causes for concern are wage growth and services inflation, which are much higher than they should be. The first cut to the Bank of England base rate, therefore, is expected to happen in August. Some experts, however, believe that a cut is now more likely in September instead.
How does the Bank of England base rate decision affect mortgages?
Mortgage lenders follow base rate expectations carefully with a view to setting their fixed rates. As the first rate cut has been pushed further back, it’s unlikely that mortgage rates will be reduced for new fixed deals. Currently, the cheapest fixed-rate deals are higher than they were at the start of the year. This isn’t good news for first-time buyers looking to get on the property ladder or homeowners who want to remortgage.
Approximately 1.6 million fixed-rate deals are due to end in 2024. With current rates higher than they were a few years ago, borrowers are now faced with having to pay a lot more when it comes to securing a new deal.
Those with a tracker mortgage or other variable rate mortgage also face disappointment with the unchanged base rate. The mortgage rate they currently pay won’t, unfortunately, come down just yet.
Speak with our expert brokers for comparison mortgage deals
If your fixed-rate deal is coming to an end, get in touch with us to secure a new rate. Don’t worry if a better deal becomes available before your fixed term ends as you can always change it. But with lenders being cautious about their rates in the current climate, it’s better to find a new deal sooner rather than later. It’s also not recommended to let your deal lapse so that you end up paying your lender’s standard variable rate. This will be much more expensive than the rate you’re paying now.
Likewise, if you’re paying a variable rate and are considering switching to a new deal, we can take a look at the alternative options for you. This includes both variable and fixed-rate deals. Our mortgage brokers can compare the different rates and terms, providing you with impartial advice. That way, you can make the best decision for your needs.
Whatever your current situation, just give us a call on 01322 907 000 to speak with our friendly mortgage brokers for advice on comparison mortgage deals.