The Monetary Policy Committee (MPC) has voted to cut interest rates from 4% to 3.75% at today’s meeting – a move which was widely expected.
After holding rates last month, members voted by a majority of five to four in favour of a cut this time around. Those four members who did not vote for a cut favoured keeping base rate at 4%. Inflation falling to 3.2% in the year to November, a better-than-expected drop, would have helped the rate setters come to their decision.
Lenders have been reducing mortgage rates in anticipation of today’s announcement, with short-term fixes now available from just over the 3.5% mark.
Commenting on the base-rate decision, Mark Harris, chief executive of SPF Private Clients, says: “This rate reduction was a dead cert after the inflation news earlier in the week.”
“The markets expect another two or three base-rate reductions in the new year, which is great news for those moving house or remortgaging.”
“Those remortgaging in the next few months have a free throw of the dice, as rates can be booked up to several months before required. You can book a rate now and review prior to completion – if rates have fallen by then, you can enquire about switching to lower rate. If not, you can keep what you have.”
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.
