The Bank of England has held the base rate at 5.25 per cent for the seventh consecutive meeting of the Monetary Policy Committee
The recent decision by the Bank of England to maintain the base rate at 5.25% was largely anticipated, despite inflation aligning with the Bank’s 2% target in May. The prevailing economic uncertainties and sustained high inflation within the service sector were key factors. Moreover, the looming general election might have played a role in the decision, as the Bank aims to maintain its stance of neutrality.
In a vote that mirrored previous outcomes, the Monetary Policy Committee (MPC) was divided, with seven members opting to keep the rate steady and two advocating for a reduction to 5%. This consistent split underscores a continued caution among the majority regarding inflationary pressures.
Nevertheless, there is a growing argument for the Bank of England to adopt a more assertive approach by lowering rates. A cut could bolster consumer confidence and inject vitality into the housing market and broader economy. The upcoming meeting in August presents an opportune moment for such decisive action.
Turning to mortgage pricing, the influence of the Bank’s base rate is significant but not solitary. Swap rates, which are pivotal in determining fixed-rate mortgage costs, have shown a slight decline following the latest inflation updates. Should this trend persist, we might see a dip in mortgage rates, which would bring some good news for borrowers if the Bank’s internal sentiment shifts towards rate reductions.
For those planning to secure a mortgage this year, it’s advisable to prepare as much as possible to account for higher rates. At Fitch & Fitch, we recommend booking mortgage products as early as six months in advance. This proactive approach not only secures your preferred rates but also provides flexibility to opt for lower rates should they decrease by the time you finalise your mortgage.
For tailored advice and the latest updates on mortgage rates, connect with our highly experienced team today. Your partner, every step of the way.