Today (19th June), the Bank of England’s (BOE) Monetary Policy Committee (MPC) announced that Base Rate will be held at 4.25%.
This announcement comes as little surprise, as last month several MPC members vocalised their concerns about the rate at which interest rates were falling, considering the volatility of the international geo-political landscape.
These concerns followed May’s 25 base point reduction from 4.5%, which was the second drop this year following a 25 base point drop in February and a hold on rates in March.
Why have the MPC held rates?
April saw inflation rise to 3.5%, up from 2.6% in March. This remains considerably above the BOE target of 2%. The MPC hopes that by holding the base rate, it can better control inflation.
The geo-political landscape has far from improved since the MPC’s last meeting in May, with the continuation of US tariff disputes and tensions in the Middle East escalating. These external pressures are pushing the MPC towards a gradual and careful approach to domestic economic issues.
However, following May’s meeting, Governor of the Bank of England, Mark Bailey, announced that the Bank will continue to place a focus on the domestic economy despite international pressures, stating “that is what ultimately matters for UK inflation and monetary policy”.
According to a recent (June 5-10) poll of 52 economists conducted by Reuters, it is possible that we will see two further reductions in rates this year, in August and November. However, these predictions will be heavily impacted by further global developments and their impact on domestic inflation.
What does this hold mean for mortgages?
This announcement will have little-to-no immediate impact on the mortgage market.
Those on fixed-rate mortgages will not see any change to their monthly payments.
Those with mortgages directly linked to the base rate, such as Tracker or Variable rate mortgages, can also expect their monthly repayments to remain consistent.
Those impacted the most by the decision will be those looking to take out a fixed-rate mortgage in the near-future, as the Bank’s announcement will likely delay any meaningful reduction in mortgage rates.
Most major lenders forecast changes to the mortgage landscape several weeks ahead of time, meaning current rates already account for the latest announcement.
How can Cooper Associates Mortgages help?
At Cooper Associates Mortgages, we continuously monitor interest rates and will always aim to move a client to a better rate should one become available to them, even once they have locked in a deal*.
Our team of expert advisers deliver friendly, holistic, fuss-free mortgage advice, tailored to your specific circumstances and future goals.
With the Bank holding rates and global issues still stirring up uncertainty, the best time to secure your rate is now. Should rates get worse, you’re secure. Should rates improve, we will swap you to the better rate.
Get in touch today to discover how our team can help you to secure the right product for your circumstances.
*Swapping rates is only possible up to 14 days before the date of completion.
