The Bank of England has held base rate at 5 per cent. Following the quarter-point reduction in rates at the August meeting, there were hopes that the Monetary Policy Committee (MPC) would reduce rates again but it voted by a majority of eight to one to hold rates this time around. One member voted to reduce rates by 0.25 percentage points to 4.75 per cent.

With inflation sticking above the 2 per cent target and expected to edge up in the autumn, the Bank was always likely to remain cautious although the markets still expect at least one further rate reduction before the end of the year, perhaps at the next meeting in November.

The next rate cut, when it comes, will give borrowers an affordability boost, easing pressure on household finances and in doing so, assisting the wider economy. If worries about the Budget are realised, the need to boost transactions and activity in the housing market will be all the more apparent.

However, while the Bank of England has failed to take action this time around, lenders are reducing their mortgage rates regardless as they compete for business. Mortgage rates continue to soften, with Santander introducing a sub-4 per cent two-year fix on the back of the lowest two-year Swap rates in two years. There are also plenty of five-year fixes at sub-4 per cent for those looking for certainty over a longer period.

While rock-bottom rates have long gone, these reductions in mortgage rates are giving borrowers some comfort after a prolonged period of rising pricing. Competition between lenders is likely to mean further gentle reductions in mortgage rates as they vie for new business.