The Bank of England’s Monetary Policy Committee (MPC) voted 5-4 to hold the base rate at 5.25% in September, ending a run of 14 consecutive increases. Despite speculation that the Bank would raise rates for a 15th time, the Committee decided to leave the base rate at its current level, following better than expected inflation figures released this week. This could suggest that the peak for interest rates is now much closer than was anticipated. Although improving, the rate of inflation remains much higher than the Bank’s target and the MPC was clear that it was ready to tighten policy if inflationary pressures were to persist.
What does this mean for borrowers?
While the Bank said today that further rate rises are not out of the question if price rises start to accelerate again, today’s announcement will come as some relief to borrowers. The decision not to increase rates will be welcomed by those on tracker or variable mortgages. Recent weeks have also seen a number of lenders cutting their rates due to a fall in the cost of funding, and the lowest 5-year fixed rate now sits at under 5%. If you’re approaching the end of your existing deal, or if you’re on your lender’s Standard Variable Rate, now is a good time to be reviewing your options. SVR’s in particular are usually much higher than other mortgage rates, so you could still make significant savings by moving to a better deal. You can find out how much staying on the SVR could set you back with our Cost of Doing Nothing calculator. You can usually secure your next mortgage up to six months before your existing deal finishes, and if rates stabilise or fall in the meantime, you’ll be able to review your options again before your new deal begins. You can compare mortgage deals here, or seek advice on the best options for you.
