The Monetary Policy Committee (MPC) has voted once again to hold the Bank of England base rate at 3.75% at today’s meeting.
While a rise in base rate was a possibility, it was never considered the most likely outcome. Inflation remained unchanged at 2.8% in May, easing some of the pressure on policymakers as they continue to balance inflation risks arising from the conflict in the Middle East against signs of a weakening economy and a softer labour market.
Unlike the previous meeting, where only one member voted for a 0.25% increase to 4%, this time two members voted in favour of a rise. The Committee said it would continue to monitor developments in the Middle East closely and assess how any economic effects feed through into inflation and growth.
Commenting on the decision, David Wise, Founder of Fitch & Fitch, said:
“A measured approach is important in the current environment. Stability and confidence matter, which is why today’s decision to hold rates was widely expected.
Mortgage pricing has continued to improve in recent weeks as swap rates, which influence the cost of fixed-rate mortgages, have eased. We expect lenders to remain competitive, particularly as they look to attract new business.
Some borrowers are considering base-rate tracker mortgages, which in many cases are currently priced below comparable fixed-rate products. For some clients, this can provide an attractive option, particularly if they believe rates may fall further over time.
However, there is no one-size-fits-all solution. If future rate rises would place pressure on your finances or budgeting, the certainty of a fixed-rate mortgage may still be the most appropriate choice.
We are also seeing some borrowers favour shorter fixed-rate products rather than longer-term fixes. The view for some is that recent movements in mortgage pricing may prove temporary, making flexibility more valuable than locking into a longer-term deal today.
With swap rates and mortgage pricing continuing to move, independent advice remains important. Understanding the options available and choosing the right approach for your circumstances can make a significant difference.”
Planning ahead remains important
For anyone looking to purchase a property or remortgage in the coming months, it remains sensible to review options early. Many lenders allow rates to be secured several months in advance, providing certainty while retaining flexibility should pricing improve before completion.
As market conditions continue to evolve, seeking advice early can help ensure you are well positioned regardless of the direction interest rates take.