The MPC has cut rates twice this year, in August and November, taking the base rate from 5.25% to 4.75%.
At the latest meeting the committee voted six to three in favour of maintaining the status quo, with the remaining three preferring a reduction in the rate.
This month marks three years since the base rate began to climb, from 0.10% to 0.25% in December 2021, rising to the peak of 5.25% in August 2023, before being cut twice this year.
Expert insight
Mortgage broker L&C Mortgages said that in December 2021 the average top 10 lenders two-year remortgage rate was 1.35% and the five-year average was 1.54%.
Now those averages are 4.46% for two-year deals and 4.27% for five year remortgage rates.
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David Hollingworth, associate director at L&C Mortgages said,
“Today’s decision to hold is no surprise but borrowers hoping to see more positive movement next year will be buoyed by the three votes for a cut this month.
“Markets are anticipating that stubborn inflation may hold back the pace of those cuts, which has knocked on into fixed rate pricing.
“On a positive note, the market is ending the year with better rates than when it began and that looks likely to be true next year.
“However, borrowers will look at today’s rates with varied perspectives. Those that are approaching the end of a five-year fixed rate below 2% will be bracing themselves for the pain of higher monthly payments.
“On the other hand, those that fixed two years ago in the wake of the mini budget will be chomping at the bit to take advantage of the lower rates now available.”
Ryan McGrath, director of second charge mortgages at Pepper Money, added: “With prices rising at their fastest pace since March, this announcement that rates will hold is not the Christmas present that some current and prospective homeowners may have been wishing for.
“Households with variable rate mortgages, or those who are looking to remortgage, will be particularly affected by market conditions not providing the stability that the Bank of England needed to move on rates.
“This reality means that homeowners on low fixed-rate mortgages will be eager to keep them. That’s where a second charge mortgage can be invaluable. For many, they provide an important chance to keep your existing deal, including the interest rate and term, and avoid early repayment charges but not have to put other parts of your life on hold.
“People who are looking to renovate their home, buy another property, or reduce monthly outgoings by consolidating debt should consider a second charge mortgage. These can also be useful if you need to pay an unexpected tax bill, like the farmers, small business owners and independent school fee-payers whose taxes will rise following the Autumn Budget.”