The Bank of England’s Monetary Policy Committee (MPC) has announced that the base rate will remain at 4.5%. This decision came with a clear majority, with eight votes to one in favour of keeping rates steady.
But what does this mean for you if you’re a homeowner, buyer, or someone looking to remortgage? Let’s break it down.
Why Was the Base Rate Held at 4.5%?
The Bank of England faces a tricky balancing act. On one side, inflation remains stubbornly high, fuelled by factors like potential tariffs and trade tensions. On the other side, the UK economy is struggling and could do with a boost.
By holding the base rate steady, the Bank is taking time to assess the economic data before making further changes. While this cautious approach makes sense, there’s pressure for action sooner rather than later.
Will Mortgage Rates Fall Soon?
We believe that we may still see two or three rate cuts before the end of the year. However, this doesn’t guarantee that mortgage rates will drop significantly in the short term.
Interestingly, two-, three-, five- and ten-year SWAP rates are converging at around 4%, meaning lenders are unlikely to cut mortgage rates dramatically unless competitive pressure forces their hand.
For homeowners and buyers waiting for lower rates, this could mean limited savings in the near term.
Should You Wait to Buy or Remortgage?
While waiting for better mortgage rates might seem sensible, there’s no guarantee they’ll fall quickly — or significantly. Meanwhile, house prices in popular areas are continuing to rise due to strong demand.
If you’re holding off on buying or remortgaging in hopes of a big rate drop, you may end up paying more in property prices instead. Predicting the market can be risky, and those waiting for “perfect timing” may miss out.
What’s Next for the Base Rate?
The key now is to watch for signals from the Bank of England on future decisions. Their tone and outlook could give clues on whether a rate cut is imminent or if we’re in for a longer wait.
If you’re considering a mortgage, speaking to a broker can help you weigh up your options and find the best deal in the current market.
Final Thoughts
With the base rate holding at 4.5%, mortgage rates are unlikely to drop drastically anytime soon. For those looking to buy, remortgage, or plan their finances, waiting for the “perfect” moment could prove costly.
The best move? Stay informed, explore your options, and speak to a trusted mortgage adviser who can guide you through the current market landscape.
