The Bank of England has decided to maintain the current base rate.
The Bank of England’s Monetary Policy Committee (MPC) has voted to hold rates.
The decision, announced today, means that the base rate will stay at 4.25%.
The MPC voted six to three to maintain the current rate. (Three members wanted to drop it to 4%.)
The Bank’s Governor, Andrew Bailey, said the “highly unpredictable” state of the world meant a cautious approach was best.
He added that concerns about inflation, sluggish UK growth, the US economy and conflict in the Middle East influenced the MPC’s decision.
Downward trend of interest rates
Two years ago, the base rate was 5%, and the average two-year fixed-rate mortgage was 5.35%
Since then, there have been several base rate cuts.
The most recent reduction was a quarter-point cut in May, when the average two-year fixed deal hovered at 4.39%.
While the MPC held the base rate today, most analysts expect interest rates to continue falling.
Some say we’re in for at least two more cuts this year. (The MPC will meet again in August.)
However, with so many variables at play in the UK and abroad, nothing is set in stone.
What does this mean for the housing market?
Falling rates have been good news for many, especially first-time buyers.
Recent Hamptons data revealed that buyer demand in May was at its highest level in four years.
It also found that the number of first-time buyers coming to the market was up by 4% on the previous year.
However, with so much going on domestically and internationally, it’s worth remembering that there’s no ‘perfect’ time to move home.
If you’re looking to get on the property ladder, upsize or downsize, it may be worth shopping around for a mortgage now* rather than putting your plans on hold while you wait for further cuts.
Getting a mortgage in principle (sometimes called an agreement in principle) will give you a clear idea of how much you can borrow, but it is not legally binding.
When you find a home that you love, a process that could take time, you can then lodge a full mortgage application.
If you’d like to arrange a free valuation for your home, contact us today.
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*Always shop around to ensure you get the best deal. Don’t forget to factor in the cost of fees and charges.
