Following the latest review by the Monetary Policy Committee (MPC), the UK base rate has remained at 4.25%. This had been predicted after the inflation rate of 3.4% for the year to May was released. The Bank of England’s (BoE) inflation rate target is 2%, which the current rate is well above.
Why hasn’t the UK base rate come down?
The Bank of England’s governor, Andrew Bailey, has previously stressed the need for caution when considering interest rate cuts. Maintaining the base rate at a higher level helps to counteract inflation by encouraging saving over borrowing. It is anticipated that inflation will remain above 3% for the remainder of the year. As such, it makes sense to keep the base rate as it is and aim to get inflation under control.
This is disappointing news for mortgage holders, though, who had hoped interest rates would be lowered. There hasn’t been much room to manoeuvre for lenders lately so it’s unlikely that there will be much movement in mortgage rates. The housing market as a whole, however, has been buoyant, with new property sales increasing.
Despite there still being a high level of uncertainty due to the UK economy and global issues, one interest rate cut is still being anticipated later in the year.
Secure a better rate sooner rather than later
If you have a fixed rate mortgage term that’s due to end within the next 6 months, you can secure a new rate now. If interest rates do come down again before the end of your fixed term, you’ll be able to change again to a better rate. Doing this now will save you from being automatically switched to your lender’s standard variable rate (SVR) when the fixed term ends. The SVR is typically higher than other rates so it’s worth being proactive as soon as you can.
Give our mortgage brokers a call on 01322 907 000 to find the best rates and terms available. Choose the best deal to suit your needs and then continue reviewing your options. That way, you may be able to benefit from a better deal before the fixed term is up.