Interest rates held at 5.25%

The Bank of England’s Monetary Policy Committee voted 6-3 to leave the base rate unchanged at 5.25% in November, suggesting that interest rates may have peaked for now.

There were 14 consecutive increases in the base rate since December 2021, before the Bank chose to leave rates on hold at its September meeting and again this month. Rates have risen rapidly to try to dampen inflation, which reached a peak of 11.1% in October 2022.

Since then, the main measure of inflation has gradually reduced, although it remained steady at 6.7% in the 12 months to September, according to latest ONS data, prompting speculation that we could see rates rise again this month. However, core inflation, which removes more volatile items such as food and energy, saw a slight reduction from 6.2% to 6.1%. That and the expectation that inflation will continue to fall helped sway the Committee towards leaving rates unchanged.

Many lenders have reduced their fixed rate mortgage offerings in recent weeks, which is good news for borrowers. However, with rates expected to stay high for longer, it’s far from certain that this will be an ongoing trend.

If your current mortgage deal is coming to an end in the next few months, you may want to secure your next deal now, as most lenders allow you to lock into your next rate up to six months before your current deal finishes.

The benefit of arranging your remortgage in advance is that if anything happens to push rates up further, you’ll have peace of mind you’ve secured a lower rate. Conversely, if rates fall before you need your next mortgage to start, you’ll be able to review your options and be able to move to a cheaper deal.

Longer term fixed rate mortgages are currently marginally cheaper than shorter term fixed rates, due to expectations that interest rates will eventually fall. The question of how long to fix for will depend on your individual circumstances, including whether you expect to move imminently. You may decide your priority is the lowest possible rate for now, or that you’re willing to pay more in the hope that you may be able to remortgage to a cheaper deal in a couple of years’ time.

If in doubt, seek professional advice on the options available to you to help you understand the pros and cons and find the most cost-effective options for you, based on your individual requirements.