The Bank of England’s Monetary Policy Committee (MPC) has voted to hold the Bank Rate at 5.25%.
The MPC voted by a majority of 5–4 to maintain Bank Rate at 5.25%. Four members preferred to increase Bank Rate by 0.25 percentage points, to 5.5%.
The Committee also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100 billion over the next 12 months, to a total of £658 billion.
Paul Heywood, chief data & analytics officer at Equifax UK, said: “Today’s decision to maintain the current base rate is a vote of confidence in the economy from the Bank of England; a sign that its work over the last 18 months has begun to bear fruit. This shift in approach from the Bank should begin to give lenders the confidence to lend to more people, more often.
“However, many consumers will find themselves continuing to weather a mix of high mortgage rates and cost of living crisis impacts. For this reason, Equifax, and our lending partners, are well prepared to ensure that consumers are effectively supported throughout their borrowing journey and can access the credit they need to live their financial best.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Following better-than-expected inflation figures, the Bank of England has made the wise move to halt the consecutive rate hikes and give them time to do their job.
“Consecutive rate rises have been painful; it’s time to leave alone for now, rather than causing continued anxiety and distress for borrowers.
“Many lenders have substantially reduced their fixed rates in the past few days and weeks on the back of calmer Swaps, which underpin the pricing of fixed-rate mortgages. While the days of rock-bottom mortgage rates are long gone, we expect pricing to improve further over coming weeks and numerous sub-5 per cent five-year fixes to come to the market. Supply is outstripping demand, which will drive down rates and Swaps, while still a little volatile, are trending downwards. While we know this can all change again on the back of negative data, for now the outlook is much more promising than it was three months ago.
“Borrowers due to come off cheap fixes still face a payment shock, so it is important to plan ahead as much as possible and act now. Rates can be booked up to six months before you need them so speak to a whole-of-market broker as to what’s available. If when you come to remortgage rates are cheaper, borrowers can choose another deal. Many borrowers are opting for shorter-term fixes or base-rate trackers with no penalties in the hope that they can fix for longer once rates become more palatable.”
