Whilte the Monetary Policy Committee (MPC) voted to hold interest rates at 4% at today’s meeting, the cost of borrowing continues to ease with several big lenders recently reducing their mortgage pricing.
The Bank voted to hold rates for a second consecutive meeting, with members voting by a majority of five to four in favour of a hold, with those four members voting for a quarter-point reduction to 3.75%.
However, with market expectations of another base rate cut before the end of the year, lenders are reducing their rates regardless.
The ‘big six’ have been particularly active in reducing rates. Nationwide is the latest to make its move, introducing a range of rate reductions yesterday for home movers, those remortgaging and first-time buyers. Its lowest fixed rate now pegged at 3.64% (a two-year fix for new and existing customers moving home at 60 per cent loan-to-value with £1,499 fee).
Commenting on the base-rate decision, Mark Harris, chief executive of SPF Private Clients, says: “There was a slim chance that the Bank would cut interest rates this month but ongoing concerns over inflation, which remained steady at 3.8% in the year to September, and perhaps a bit of wait-and-see as to what impact the Budget has, meant caution prevailed.”
“We are encouraged by four members voting for a reduction in base rate and hope more of the Committee come round to their way of thinking in due course, perhaps even as soon as next month.”
“A rate cut today would have been a welcome shot in the arm for the housing market, particularly amid so much speculation as to what property taxes – and more – will be included in the Budget in three weeks. Despite five rate reductions since August last year, affordability concerns persist with borrowers having to get used to higher mortgage rates. Thankfully, the big lenders are reducing their rates in an effort to drum up further business before the year-end, with some competitively-priced products out there.”
Those looking to take out a new mortgage or refinance in coming months should plan ahead as much as possible, seeking advice from a whole-of-market broker such as SPF Private Clients. Rates can be booked up to several months before you need them so it’s worth doing this for peace of mind. If rates have fallen by the time you come to take out your mortgage, you should be able to move onto a cheaper deal at that time.
