The Bank of England base rate has been held again at 4%. This was a finely balanced decision, with experts split on their opinions as to which way the vote would go before the review.
On the one hand, the inflation figures released in October were better than expected — the inflation rate remained at 3.8%, which was lower than the rate predicted by the Bank of England. On the other hand, the inflation rate is almost double the bank’s 2% target and remains persistent. There are also concerns as to how the Autumn Budget will affect inflation.
Are interest rates likely to be cut this year?
A cut to interest rates by the end of the year hasn’t been ruled out, with the prospect of this having risen at the end of October since the previous month. However, economists believe that more inflation data is needed first before a cut can be made and this will be heavily impacted by the Autumn Budget. The next base rate review to be held by the Monetary Policy Committee (MPC) is on 18th December, with the inflation rate figure being released the day before.
How does the Bank of England base rate affect your mortgage?
As the base rate has remained the same, your mortgage rate won’t be affected if you have a tracker mortgage or other type of variable rate mortgage. A fixed rate also won’t be affected until the end of the fixed-deal term.
If you’re coming to the end of your fixed-rate deal, you may be wondering whether to change to a new deal now or hold on in case rates start coming down. When setting their mortgage rates, lenders take swap rates into consideration. These have already priced in any anticipated cuts and some lenders have already lowered their mortgage rates recently, ahead of potential interest rate cuts.
With these lower rates and the uncertainty around the Autumn Budget, it’s recommended to lock in a new rate now rather than wait. If a better rate becomes available before your new deal starts, you can always change it.
Explore your options with our mortgage experts
Our mortgage brokers are here to help you make the best decision for your needs and circumstances. Just give us a call on 01322 907 000 to get expert, impartial advice and a thorough comparison of the deals available. Whether you’re buying your first home, are ready to remortgage or are preparing to make your next investment purchase, our brokers can talk you through all of the options, enabling you to choose the right one.