BANK OF ENGLAND VOTES TO HOLD THE BASE RATE AT 5.25 PER CENT IN MAY 2024

SPF

Picture of Mark Harris

Mark Harris

Chief Executive

The Bank of England has held base rate at 5.25 per cent for the sixth consecutive meeting of the Monetary Policy Committee. This decision was widely expected, with speculation continuing as to when the first rate reduction will come.

By the time of the next meeting in June, there will have been two further sets of inflation data and if we continue to see a positive trend, we would urge the Bank to take action and cut rates before it’s too late. Arguably, the Bank was too slow to raise rates, so it is important not to make the same mistake twice. Reducing rates will increase borrower confidence and give the housing market a welcome boost.

The MPC voted by a majority of seven to two to maintain Bank Rate at 5.25 per cent, with two members preferring a quarter-point reduction to 5 per cent. This is a bigger split than at the previous meeting where eight members voted for a hold and one for a quarter-point cut.

As far as mortgage pricing is concerned, what the Bank of England does with base rate is only part of the picture. If Swap rates, which underpin the pricing of fixed-rate mortgages, edge further downwards, then lenders will introduce cheaper mortgage rates, increasing the choice for borrowers at more palatable pricing. With Barclays and Lloyds already announcing reductions this week, hopefully it is only a matter of time before other lenders follow suit.

Borrowers who are due to take out a mortgage this year will still face a payment shock, so it is important to plan ahead as much as possible. Rates can be booked up to six months before needed so it is important to speak to a whole-of-market broker, such as SPF, to find out what’s available. If when you come to take out the mortgage rates are cheaper, you should be able to choose a lower rate.

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