Interest Rate Update: Bank of England Holds Rates

The Bank’s Governor, Andrew Bailey, said the “highly unpredictable” state of the world meant a cautious approach was best. He added that concerns about inflation, sluggish UK growth, the US economy and conflict in the Middle East influenced the MPC’s decision. 

Two years ago, the base rate was 5%, and the average two-year fixed-rate mortgage was 5.35% 

 

Since then, there have been several base rate cuts with the most recent reduction being a quarter-point cut in May, when the average two-year fixed deal hovered at 4.39%. 

 

While the MPC held the base rate today, most analysts expect interest rates to continue falling with some predicting we’re in for at least two more cuts this year. However, with so many variables at play in the UK and abroad, nothing is set in stone. 

Falling rates have been good news for many, especially first-time buyers. 

 

Recent data revealed that buyer demand in May was at its highest level in four years and also found that the number of first-time buyers coming to the market was up by 4% on the previous year. 

 

With so much going on domestically and internationally, it’s worth remembering that there is rarely a ‘perfect’ time to move home or get on the property ladder but if you are looking to do so it is certainly worth shopping around for a mortgage now rather than putting your plans on hold while you wait for further cuts. 

Getting a mortgage in principle (sometimes called an agreement in principle) will give you a clear idea of how much you can borrow, but it is not legally binding. Furthermore if rates change then your advisor may be able to switch you to a better deal.