BREAKING NEWS - Interest rate held again at 5.25%
The Bank of England has decided to keep the base rate at the same level for the second month in a row.
The Bank of England has decided to hold the base interest rate at 5.25% for the second consecutive month.
A decision to keep the rate static was widely expected with inflation, at 6.7%, apparently under control, albeit not dropping.
Last month, the Bank held the rate after 14 consecutive increases, since the end of 2021.
Mortgage rates have started to fall slowly to reflect the Bank’s decisions, but are still much higher than a year ago.
The Bank’s Monetary Policy Committee voted by a majority of 6–3 to maintain the rate at 5.25%. Three members preferred to increase it by 0.25 percentage points, to 5.5%.
Nicholas Mendes, mortgage technical manager at John Charcol, says: “Today’s ‘hold’ announcement has been widely anticipated by the markets and commentators, with any further rate hikes looking increasingly unlikely.
“UK economic activity is weakening, and inflation is on a downward trend. Now is the time to pause and monitor rather than adding further pressure onto borrowers and consumers.”
Mark Harris, CEO at mortgage broker SPF Private Clients, says: “As expected, the Bank of England has made the wise and welcome move to hold base rate again at 5.25 per cent.
“The run of 14 consecutive rate rises before September’s pause have been painful. Today’s decision will raise hopes that base rate has peaked, allowing the dust to settle rather than causing further anxiety and distress for borrowers,” he says.
‘Borrowers will be wondering what happens next. Those hoping rates will move swiftly downwards could well be disappointed; we expect a period of around six months during which rates will plateau, followed by a gradual reduction in base rate to ‘normalised’ levels of around 3 per cent.”
Nick Leeming, chairman of Jackson-Stops, says: “The market will take some clarity and comfort from the Bank of England’s decision to hold the base rate at 5.25% today.
“While international events have added to already challenging conditions and the curtain has firmly fallen on the era of cheap borrowing, monetary policy will not be determined in the long-term by short-term pressures, and quite rightly so,” he says.
“This is the final time the Monetary Policy Committee will meet before the Chancellor’s Autumn Statement, when we hope to hear more about the Government’s plans for the housing market including possible policy changes and tax cuts.”
Simon Gammon, managing partner at Knight Frank Finance, says: “Mortgage rates have been easing since late July and are now beginning to plateau.
“The Bank of England’s decision to hold at 5.25% was largely priced in, and we expect the rate of inflation to be the biggest determinant of whether we see more substantial mortgage rate cuts before the end of the year,” he says.
“Typical five-year fixed rates now sit around 4.8%. That may ease to around 4.5% by the year end if the annual rate of inflation dips to 4% – 5%.”
John Phillips, CEO of Spicerhaart and Just Mortgages, says: “It is encouraging to see the Bank of England continue to hold interests rates, as the markets and the majority of economists expected.
“In reality, it feels like the only logical move as it’s still too soon for any reduction and an increase would just lump further misery and uncertainty on borrowers – especially as the Bank of England itself still doesn’t yet know the full extent or impact of its 14 previous rises,” he says.
“While inflation stagnated in September, the general consensus is it will continue its downward trend. In the mortgage market, today’s news will hopefully offer some stability and give lenders the confidence to take a further look at their books and continue to price more competitively.”