The Monetary Policy Committee (MPC) has voted to hold the Bank of England base rate at 3.75% for the sixth consecutive meeting.
With both the US Federal Reserve and the European Central Bank increasing their benchmark interest rates, there had been some expectation that the Bank of England could follow. However, the Committee opted to leave rates unchanged.
Markets continue to price in the possibility of further interest rate increases over the coming months. Inflationary pressures remain a concern, with the prospect of higher energy costs alongside continued uncertainty surrounding the labour market and the wider economy.
The voting split remained unchanged from July, with six members voting to keep base rate at 3.75% and three favouring a 0.25% increase to 4.00%. The Committee noted that “the risks to the inflation outlook are tilted to the upside, and more so than at the time of the July Monetary Policy Report”, while acknowledging that the outlook could still change materially as events in the Middle East continue to develop.
Commenting on the decision, David Wise, Founder of Fitch & Fitch, said:
“A measured approach remains the right one. Maintaining stability, rather than reacting too quickly, helps support confidence in both the economy and the mortgage market.
Although the Bank has held rates, borrowers are continuing to see mortgage pricing move upwards, with several major lenders increasing rates across their two and five-year fixed products. Affordability remains a challenge for many borrowers, despite swap rates easing slightly today after recent volatility.
In this type of market, planning ahead is more important than ever. Most mortgage offers remain valid for up to six months, allowing borrowers to secure a rate now while retaining the opportunity to review their options before completion. If rates improve, a lower product may be available. If they rise further, you have already protected your position.
Every client’s circumstances are different, which is why independent, whole-of-market advice remains invaluable when deciding the right time to secure a mortgage.”
Planning ahead remains important
Whether you are purchasing a property or approaching the end of your current mortgage deal, reviewing your options early can provide valuable flexibility. Securing a mortgage in advance allows you to benefit from today’s pricing while retaining the opportunity to move to a lower rate should lenders reduce pricing before completion.