On February 1st, the Bank of England (BoE) opted to hold the Base Rate at 5.25% for the fourth consecutive time.
This came after a series of 14 successive rate hikes were implemented to tackle rising inflation (which had exceeded 10% in early 2023— alarmingly higher than the government’s 2% target).
Throughout the second half of 2023, inflation in the UK experienced a noticeable decline, reaching as low as 3.9% in November; however, January brought news of a slight uptick to 4.0% for the month of December.
While this increase was marginal, it marked the first rise since February 2023.
What does it mean for the mortgage market?
Notably, the BOE’s decision to hold the Base Rate at 5.25% in September, November, and December coincided with a gradual decrease in mortgage rates over the same period and into 2024.
The average 5-year fixed rate has decreased from 6.08% in July 2023 to 4.66% this week, while the average 2-year fixed rate has dropped from 6.61% in July to 4.99%. (1)
In late 2023, market economists forecasted that the first Base Rate reduction might occur by late Spring 2024, but the BoE has since cautioned against premature rate cuts, emphasising the need for further progress towards inflation reaching the 2% target. (2)
How will it affect your mortgage?
Those with variable or tracker mortgages will see stable payments following this month’s Base Rate hold, while for those on fixed-rate deals, monthly payments will remain unchanged until the deal’s conclusion.
What to do if you need to remortgage?
In many cases, the best advice is to take advantage of the attractive deals available today, as navigating future market shifts carries a huge element of risk.
While current indications suggest a potential Base Rate reduction toward the end of 2024, these expectations remain contingent on the broader economic landscape, and forecasts suggest a rise in inflation in the second half of 2024. (3)
For those considering their remortgage, our advisors are ready to guide you through your options. Taking proactive steps today could secure you a deal that surpasses anything on the horizon.
Don’t wait, trust us to guide you through the complexities of the current financial climate.
Call us on 01489 346624 to discuss your options. Our CeMAP qualified team are waiting for your call.
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1) https://www.rightmove.co.uk/news/articles/property-news/interest-rates-update/
2) https://www.theguardian.com/business/2024/feb/01/bank-of-england-keeps-interest-rates-unchanged
3) https://www.rightmove.co.uk/news/articles/property-news/interest-rates-update/
Remember to think carefully before securing other debts against your property; your property may be repossessed if you do not keep up repayments on your mortgage.
