📊 Bank of England Holds Base Rate at 5.25% 📊
The Bank of England has announced that it will maintain the Base Rate at 5.25% for another month. This decision comes after holding the rate steady since August 2023, following 14 consecutive rises. What now?
The Bank of England has announced that it will maintain the Base Rate at 5.25% for another month. This decision comes after holding the rate steady since August 2023, following 14 consecutive rises. The Bank had been raising interest rates to combat high inflation, which exceeded 10% in early 2023, far above the government’s 2% target. However, as of June 19, inflation has fallen back to its target of 2%.
🏡 What’s Happened to Mortgage Rates Recently?
In January 2024, we saw an unexpected rise in inflation, which resulted in mortgage rates edging up throughout the spring. But these increases were nothing like the spikes we saw in July 2023, when the Base Rate was still climbing.
📉 The average 5-year fixed mortgage rate has decreased from 6.08% in July 2023 to 5.03% this week. Similarly, the average 2-year fixed rate has dropped from 6.61% in July to 5.44%.
💬 What Do the Experts Think?
Rightmove’s mortgage expert, Matt Smith, says:
“While the Base Rate hasn’t dropped today, yesterday’s positive inflation figure has kept us on course for a first cut by August. While many will have hoped for a surprise cut today, a hold was expected by the market – and therefore, this certainty could still lead to mortgage rates trickling down rather than up over the next few weeks, which is really what home-movers are after.”
“It’s difficult to predict when we could start to see sizeable drops in mortgage rates, mostly because their movement is dependent on what happens with the Base Rate, inflation, swap rates, and if there are any unexpected shocks to the economy.”
📅 When Could Interest Rates Start to Drop?
Barring any shocks to the wider economy, the Base Rate is expected to be cut at some point this year, and continue to edge downwards through 2025.
🕛 The next decision on interest rates will be announced at 12pm on August 1, 2024.
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