Today, the Bank of England’s (BoE) Monetary Policy Committee (MPC) took the decision to maintain the UK base rate at 5.25% for the fourth time in a row.
Kellie Steed, Uswitch.com mortgage expert comments:
“The Bank of England (BoE) took the decision to hold the base rate of interest at 5.25% today, in their first decision of 2024. This has now been held at the current rate since September 2023, with the last change made in August 2023 when it rose to 5.25%, a 16-year high. Despite maintaining this rate for a few months, many financial forecasters expect the BoE’s monetary policy committee (MPC) to make cuts to the base rate later in the year, given the significant fall in inflation over the past few months.
Does this mean mortgage rates will fall?
“Due to expectations of cuts later in 2024, many mortgage lenders had already begun reducing their rates ahead of today’s announcement. Both big six lenders, such as Halifax and HSBC and a number of building societies have reduced their fixed-rate deals multiple times throughout January. Some now have selected products available at around 4%, and even slightly below that in certain circumstances.
“However, it remains to be seen whether there will be further cuts to mortgage rates in the coming days as a result of today’s decision. Some economists are predicting that the base rate won’t fall until May or June, however, London Stock Exchange Group data shows that the base rate is largely expected to fall an entire percentage point, down to 4.25%, by the end of 2024.
Should I remortgage now or wait for further rate reductions?
“As ever, when it comes to mortgages, it depends on your current circumstances. If rates and inflation continue to travel in their current direction, it’s perfectly possible that lenders will be offering lower rates as a result than they are today, before the end of 2024.
“However, if you’re already on your lender’s SVR (standard variable rate) and don’t intend to move home any time soon, is it worth paying a considerably higher rate whilst you anticipate a reduction that is as yet uncertain?
“The average SVR in the UK at the moment is still fairly high, at 8.74%, so if you’ve got a high mortgage balance, this could be having a real impact on your affordability. Especially when some of the better fixed and variable rate deals available at the moment are around half of that.”
For further information please visit https://www.uswitch.com/mortgages/
