Once again, a vote by the Monetary Policy Committee (MPC) has been made to keep the base rate at 5.25%. This is the fifth time that the rate has been held at this level since August 2023, when it reached a 15-year high following 14 consecutive increases since December 2021.
An anticipated decision on the current base rate
This decision was widely expected as indicators of inflation persistence have remained elevated. The current UK inflation rate is 3.4%, which is down from the rate of 4% in January. Whilst this is heading in the right direction, and a significant decrease from the 41-year high of 11.1% in October 2022, it is still higher than the Bank of England’s target rate of 2%. As a result, rather than lowering the base rate in response, it needs to remain high so that inflation is forced to decrease even further. The Bank of England has made it clear that future interest rate increases haven’t been ruled out if inflation persists.
What does this mean for your mortgage?
When interest rates are higher, the cost of borrowing increases. In recent months, in response to the falling inflation rate, mortgage lenders have been reducing their rates. However, last month, many lenders began increasing their rates again in response to signs of a base rate cut being pushed further back.
If you have a fixed-rate deal
If your fixed-rate deal is coming to an end within the next 6 months, it’s important to act quickly to secure a new deal. Existing mortgage deals offered by lenders are ending quickly so don’t wait to see what happens in the hope of securing a better rate. It’s uncertain what will happen with mortgage rates over the next few months but, at the moment, they’re increasing again. You can always change to a better deal if one becomes available before your fixed term ends. Your dedicated mortgage broker will continually check the rates for you and let you know if a better option comes up.
Avoid a changeover to your lender’s SVR
It’s important not to keep waiting in case mortgage rates come down and then leave it too late. If your current fixed deal ends and you have to pay the lender’s standard variable rate (SVR), this will be significantly more expensive for you. Speak to one of our mortgage brokers to discuss your options and secure the best rate possible before they disappear. Just give us a call on 01322 907 000.
If you’re paying a standard variable rate
If you’re already paying a standard variable rate, speak with our mortgage brokers to find out what savings you can make if you switch to a new deal. SVRs are currently very high and our brokers will compare your existing deal with the alternatives available. They will calculate the fees charged if you decide to remortgage, including any early repayment charges, to give you a full comparison.
Get impartial advice on comparison deals
With access to exclusive deals, our brokers can find the best options available for you and provide you with impartial advice on each. That way, you can make an informed choice when deciding on the next step to take with your mortgage. Simply call us on 01322 907 000 to discover how alternative deals compare with your existing one.