The Monetary Policy Committee (MPC) has voted to keep the current Bank of England base rate at 5%. This had been predicted by economists following the release of the latest inflation rate figure, which has remained at 2.2%. The vote was 8-1 with one member voting to lower the rate to 4.75%.
How does the current Bank of England base rate affect your mortgage?
If you have a fixed rate mortgage, your interest rate will remain unaffected until the end of the fixed term. When you change to a new deal, your rate will change accordingly when it starts. If you have a tracker mortgage, your rate is likely to be linked to the base rate. Therefore, as the base rate has remained the same, your mortgage rate will also stay the same. If you have a discount mortgage or other standard variable rate (SVR) mortgage, it is also unlikely that you’ll see a change to your rate. SVRs are set by lenders so any rate changes are at their discretion.
When will interest rates go down?
The next base rate review meeting to be held by the MPC is on 7th November 2024. It is widely anticipated that the base rate will be lowered at this point. However, it will depend on whether inflation remains under control as well as other economic factors.
Andrew Bailey, the governor of the Bank of England, has advised that interest rates should be able to be cut in the near future as inflation has cooled. He has also stated, however, that this needs to be done gradually to ensure that inflation remains low. The BoE has previously warned that a future base rate increase won’t be out of the question if inflation rises.
As a reduction to the base rate is expected in November, lenders have already factored this into new fixed-rate deals. This means that fixed-rate mortgage deals are becoming slightly more affordable, which is good news if your current deal is coming to an end or you’re considering switching to a new deal.
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Whether you’re looking for a new mortgage or considering a remortgage, give us a call on 01322 907 000 to find out what options are available. Our mortgage brokers will discuss your situation and provide you with comparisons to help you make the best decision for your mortgage needs.