The base rate has been cut from 4% to 3.75% after a 5-4 vote from the Bank of England\u2019s Monetary Policy Committee.<\/p>\n
The reduction comes after inflation slowed from 3.6% to 3.2% in November, getting closer to the Bank\u2019s 2% target.<\/p>\n
Peter Stimson, director of mortgages at the lender MPowered, said: \u201cWith inflation falling away and Britain\u2019s economy shrinking, the markets had convinced themselves that today\u2019s decision would be a full-throttle cut, which would be swiftly followed by more in 2026.<\/p>\n
\u201cThe narrowness of the vote suggests that the Bank\u2019s ratesetting committee isn\u2019t so sure. Nearly half of its members voted to leave rates unchanged, and the accompanying minutes were curiously ambivalent.<\/p>\n
\u201cWhile saying that the Base Rate is likely to continue on a \u2018gradual downward path\u2019, the text added that future judgments \u2018will become a closer call\u2019.\u201d<\/p>\n
Stimson added: \u201cI\u2019m not sure how things can get any closer than today\u2019s 5-4 split. In the coded language beloved of central bankers, the committee is saying that deep divisions remain between its members.<\/p>\n
\u201cThe mortgage swaps market, which predicts the future course of the Base Rate and is used by mortgage lenders to determine the fixed interest rates they offer to borrowers, still suggests there will be a further Base Rate cut in 2026.<\/p>\n
\u201cBut the likelihood of that cut coming as soon as February has been pegged back by today\u2019s vote and minutes, and this change to the timeline may well feed into the fixed rates that mortgage lenders offer to their customers now.\u201d<\/p>\n
Mortgage holders coming to the end of their deal are likely to benefit from successive base rate cuts in 2025, as the base rate stood at 4.75% one year ago.<\/p>\n
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Sarah Coles, head of personal finance, Hargreaves Lansdown, said: \u201cIf you have a mortgage coming to an end in the next 3-6 months, it\u2019s worth searching out a good deal.<\/p>\n
\u201cThere are some great rates available right now, and you could snap up a two- or five-year fix for less than 4%. If mortgage rates fall before the remortgage is due, you can hunt around for a better deal.<\/p>\n
\u201cHowever, if they were to rise with a surprise in inflation, you\u2019ll have locked in a bargain.\u201d
Peter Stimson, director of mortgages at the lender MPowered, said: \u201c\u201cMany lenders trimmed their rates in anticipation of today\u2019s decision, as part of a last-ditch effort to grab market share and hit their 2025 lending targets.<\/p>\n
\u201cThe Bank\u2019s decision means the wave of rate cuts we\u2019ve seen in recent weeks may now subside. So if you\u2019re planning to buy a home in 2026 and have been holding out for mortgage rates to get even lower, don\u2019t expect them to keep falling.<\/p>\n
\u201cWe may well be at the bottom as far as mortgage rates are concerned, and the current mortgage deals may be as cheap as they are going to get.\u201d<\/p>\n
However it\u2019s thought most lenders had already priced in a base rate cut, meaning this reduction shouldn\u2019t make a big difference to available rates.<\/p>\n
Matt Smith, Rightmove\u2019s mortgages expert, said: \u201cThe financial markets and mortgage lenders have been expecting today\u2019s Bank Rate cut for a while, and therefore responded early with mortgage rate cuts in December to round off the year.<\/p>\n
\u201cBank Rate cut headlines are always positive for home-mover sentiment, even if this one has already been baked into mortgage rate cuts and won\u2019t drive further drops.<\/p>\n
\u201cHowever, what will have more of an impact on the future direction of mortgage rates is the better than expected inflation figure reported earlier this week, which has improved the market\u2019s forecast for next year.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
The base rate has been cut from 4% to 3.75% after a 5-4 vote from the Bank of England\u2019s Monetary Policy Committee. The reduction comes after inflation slowed from 3.6% to 3.2% in November, getting closer to the Bank\u2019s 2% target. Peter Stimson, director of mortgages at the lender MPowered, said: \u201cWith inflation falling away […]<\/p>\n","protected":false},"author":1,"featured_media":6570,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-6569","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-second-home"],"yoast_head":"\n