Mortgage news
Base rate decision: Relief for homeowners
Following the MPC’s announcement to hold the base rate at 5.25% on 2nd November 2023, Thomas Jackson, Managing Director for Cooper Associates Mortgages, explains why this decision warranted a sigh of relief from homeowners.
“The property market is beginning to slow down which is likely to be attributed to a tightening of budgets as we head into the winter months. National mortgage data showed that September was one of the quietest months for mortgage searches.
“Unfortunately, national data is also showing the number of house repossessions and debt arrears increasing – another reason why the property market is stalling. The nation is really having to cut the cloth accordingly and prioritise necessary spend over luxury spend.
“A base rate hold is the best way forward. Another 0.25% increase will have undoubtedly caused many lenders to increase rates. They wouldn’t have been prepared to have their margins squeezed, so they would have needed to pass the costs onto customers.
“As we head into colder months and the financial strain of Christmas, an increase would have been an unwelcome move for many homeowners on variable rate mortgages, those who are coming to the end of their term, and frustrated first-time buyers who have been waiting for so long to get their feet on the property ladder. For some, it may have meant unmanageable housing costs.
“It’s likely, after six weeks of stability in the market, the decision to hold at 5.25% will enable this trend to continue. Tighter household budgets in Q4 may mean that inflation falls again without another base rate increase at all, but time will tell.”
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