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Mortgage interest rate news: Bank of England holds at 5.25%

In the latest mortgage interest rate news, the Bank of England votes to hold interest rates at 5.25% - but what does this mean for you and your mortgage?

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 10 May 2024

3 min read

Mortgage interest rate news: Bank of England holds at 5.25%

The Monetary Policy Committee (MPC) met yesterday for the third meeting of 2024 to set the Bank of England Base Rates (BBR). Even though earlier predictions had all suggested that the MPC would continue to hold the mortgage interest rate at 5.25%, there has been increasing pressure to consider an early reduction of 0.25%.

Despite the added external pressures from some of the UK’s top economists, the MPC did in fact vote to continue to hold the rate at 5.25%. The Independent reported yesterday that governor Andrew Bailey had said that Threadneedle Street would not bow to political pressure to reduce interest rates.

The Bank of England held a news conference after the announcement to talk through its decisions and to answer any questions. Sky News streamed the video live and you can watch the full video on YouTube.

Bank of England holds news conference as the base interest rate is held at 5.25%

In summary, the Bank of England decided to continue to hold the interest rate at 5.25% which was as predicted in our earlier reports. The interest rate could not be dropped at this point because of a lower performance in the inflation rate which was 0.1% higher than the 3.1% that the city was expecting.

Inflation has dropped to a recent low at 3.2% which has been a result of the lowering costs of food and energy. Unfortunately, the energy prices from Q4 2023 were still causing below expected economic growth.

Some predictions have now moved the expected date for the next interest rate cut to as early as June, which is much earlier than previous predications of October or even November. The rate is still expected to reduce by 0.25% to 5% which will be a positive step for mortgage borrowers in the UK.

The inflation rate for the past 12 months is set to fall in the next several months to somewhere near the target level of 2%. This is due to the energy price cap and the  continued growth of the UK economy.

It is also predicted that inflation will rise again in the latter part of the year as energy prices rise again, which could have a knock-on effect on interest rates.

Mortgage borrowers have seen a recent increase in mortgage interest rates from most of the top mortgage lenders. This was a reaction to the Bank of England Base Rate not reducing as had been predicted, and to protect them against potential further delays in rate cuts.

The news from yesterday’s meeting would likely cause a continued period of stabilisation in the mortgage rates and no action for at least a couple of months. Some mortgage rates and deals might start to drop towards the mid-end of the summer depending on how the economy continues to perform.

It is unlikely that mortgage rates will drop significantly over the next 6 months, even though there could be some adjustments in deals and lending.

It’s difficult to say in the current economic climate and some of the most unpredictable period of interest rate movements in recent times. It is likely that interest rates will now stabilise at the current levels for at least the next 12 months with some potential for minor movements either way.

If you need to speak to a mortgage expert about your mortgage and your options then you can contact our team of mortgage specialists on 0800 009 6556.

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