Bank of England Bank Rate Freeze!
How will the latest announcement impact the slowing housing market and what will happen with mortgage rates?
Bank of England Bank Rate to stay at 5.25%
The Bank of England's Monetary Policy Committee recently made a significant decision, voting 5-4 to maintain the Bank Rate at 5.25%. This comes after a remarkable streak of 14 consecutive rate hikes aimed at curbing inflation. The financial industry was abuzz with speculation prior to the announcement, pondering whether we would see a 15th rate increase to 5.5%. However, the Office for National Statistics (ONS) recently surprised everyone with data showing a drop in CPI inflation to 6.7% in August.
Bank of England Governor Andrew Bailey shared his insights on this decision, emphasizing the recent decline in inflation. He cautioned against complacency, emphasizing the need for inflation to return to a normal level and the Bank's commitment to making the necessary decisions to achieve this goal.
What does this mean for mortgages?
Over recent weeks we have seen mortgage borrowing interest rates falling and the lenders were expecting inflation to rise and interest rates to increase by at least 0.25% to 5.50%. With the surprise news that we had seen a slight fall in inflation rather than the expected rise the Bank of England have voted to remain as we are, the first month without an increase in 15 months.
We are hoping that this will give even more confidence to mortgage lenders to be even more competitive with their rates and hopefully see them fall a little further.
What impact will this have on the local housing market?
This is great news for both the local and national housing market, it is clear that the market has taken a beating over the last 18 months, in part due to the interest rate rises and the cost of living crises but my own belief is that it was due to settle following a 20% rise in prices in less than 2 years. While I will never welcome a downwood adjustment in prices they have been fairly small compared to the rises since 2021 and the news today should spark some confidence with mortgage lenders and buyers alike. I am not expecting prices to rise again but more confidence and potentially better affordability with lower mortgage rates can only help the local market.
If you are thinking about moving or remortgaging then now, more than every you need independent mortgage advice. Give me a call on 01525 713111 or fill out the contact box if you would like to speak to our indendent mortgage broker, he is completely free of change and will look at every lender available to ensure you get the best deal.