May 9th, 2024
Amongst a backdrop of major lenders hiking rates and a slowly reemerging housing market, the UK base rate has once again been held at 5.25% by the Bank of England. A figure we are all familiar with, remaining constant since August 2023.
The decision marks the sixth consecutive meeting where the rate has remained unchanged, and reflects ongoing concerns about mortgage rates and when they will start to settle.
Initially, there were expectations that the base rate might be reduced as early as June. However, with inflation proving to be more persistent than anticipated, those expectations have now been pushed back to August for many.
The prospect of a delayed base rate cut has already begun to manifest in the mortgage market, with several major lenders increasing rates on fixed-rate mortgage products in response to higher funding costs.
Barclays, HSBC, NatWest, Nationwide, Santander, among others, have all adjusted their rates upward, leading to a notable increase in the average rate on five-year fixed-rate mortgages to 4.97% as of May 1st, 2024.
Kevin Kiley of CMME commented the following:
The next base rate announcement is expected to provide further clarity on the Bank of England’s monetary policy stance.
However, with inflation remaining a key determinant, the path of future rate adjustments remains subject to change.
In conclusion, while the decision to keep the base rate unchanged offers stability for borrowers in the short term, ongoing uncertainty surrounding inflation underscores the need for vigilance in the UK mortgage market.
As policymakers continue to monitor economic indicators, borrowers and lenders alike will be closely watching for any signs of future rate adjustments and their potential impact on mortgage affordability.
Regardless of whatever the mortgage market has to offer, CMME stands ready to assist its clients. If you require further guidance, click here to book a FREE no obligation call with us and discuss your options.