Base Rate Held At 4.5%
The Bank of England has voted to keep its interest rate at 4.5%, with only one committee member favoring a reduction. This decision follows February's cut from 4.75% and was widely anticipated by financial experts due to rising inflation and wage growth.
What does this mean for homeowners?
If you have a mortgage, today's decision means interest rates will remain stable for now. Many homeowners hoping for lower monthly payments will need to wait longer, as the Bank adopts a cautious approach to further rate cuts.
Inflation has nearly doubled since September, reaching 3% in January—higher than economists expected. This inflation is projected to rise further to around 3.75% before falling back, which explains the Bank's careful stance.
When might mortgage rates come down?
Industry experts are now looking ahead to May for a potential second rate cut of the year. According to Matt Smith, Rightmove's mortgage expert: "Average mortgage rates have trickled downwards slightly but pretty much stayed flat since February's decision. There currently isn't much wiggle room for lenders to offer cheaper rates, and hopefully a second cut can spur forward another wave of falling rates, bringing average rates closer to 4% rather than 5%."
Some lenders may become more competitive after the upcoming Stamp Duty deadline passes, potentially offering better deals as their processing capacity frees up.
Should homeowners wait for lower rates?
Tim Parkes, CEO of RAW Capital Partners, cautions against simply waiting for rates to fall: "Sitting tight in the assumption that rates will tumble could prove risky. With data showing that house prices and buyer demand are on the rise, the market will clearly move ahead."
For those on variable rate mortgages, monthly payments will remain unchanged following this decision. If you're approaching the end of a fixed-rate deal, experts suggest considering your options carefully rather than assuming rates will fall significantly in the coming months.
Despite interest rates not falling as quickly as some had hoped, the housing market has enjoyed a strong start to the year, with house prices rising amid increased buyer demand and transaction levels.
The Bank's decision reflects ongoing economic uncertainty, with the committee noting increased global trade tensions, tariff announcements, and rising financial market volatility worldwide.
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