The Bank of England’s Monetary Policy Committee voted unanimously in March to leave the base rate unchanged at 0.1%, amid hopes that the UK’s economic recovery may be faster than expected. The vaccine rollout has helped boost Britain’s economic outlook, the governor of the Bank of England said prior to the base rate announcement, although he conceded that if new Coronavirus variants emerge, this could hinder recovery. Speaking on BBC Radio 4’s Today programme, Andrew Bailey said he was “more positive” about the UK’s economic recovery, but “with a large dose of caution.” The Bank of England Monetary Policy Committee also acknowledged that the economy’s outlook remains “unusually uncertain.”The UK’s economy contracted by 2.9% in January, which was less weak than expected, and the Bank is optimistic that the annual inflation rate, currently 0.7%, will start to rise towards the government’s 2% target, as lockdown measures are eased and the vaccination roll out continues. Keeping rates low when inflation is low provides support for businesses and households as it helps keep their borrowing costs down. It’s been a year since the base rate was cut to 0.1% and despite speculation that interest rates could fall into negative territory, the more positive economic outlook suggests that such a move – at least for the time being – may not be necessary. However the Committee refused to rule anything out and said that it “stands ready” to take action if it becomes necessary.
Wider choice of mortgage deals
The record low base rate isn’t the only good news for homebuyers and owners - there is currently the highest number of mortgage deals on the market since March 2020. However, average two and five-year fixed rate mortgages have ticked up slightly in recent weeks, so if you’re considering remortgaging or purchasing a property, you may want to consider looking for a mortgage deal sooner rather than later.
