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Bank Rate held at 5.25 per cent

Bank Rate held at 5.25 per cent
Christina Hoghton
Written By:
Christina Hoghton
Posted:
01/02/2024
Updated:
01/02/2024

The Bank of England's Monetary Policy Committee has held the Bank Rate at its 16-year high of 5.25 per cent.

The group of nine economic experts were not in agreement, with the vote split three ways.

Six committee members voted to hold at 5.25 per cent, two wanted to hike rates while one member preferred a rate cut.

Overall, the decision to hold was expected by the markets but the three-way split underlines the difficulties facing the Bank of England when it comes to Monetary Policy.

What’s next?

Experts are still predicting a cut in rates this year, assuming inflation returns to its two per cent target, as the Bank expects.

Kellie Steed, Uswitch.com mortgage expert, agreed a cut was on the way: “Despite maintaining this rate for a few months, many financial forecasters expect the BoE’s monetary policy committee (MPC) to make cuts to the base rate later in the year, given the significant fall in inflation over the past few months.”

Impact on mortgages

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “We had seen rapid falls in mortgage rates from the peak in August. However, as a result of the rejig of expectations, those have slowed significantly, and have barely moved over the past week. The path is still downhill, and we expect cuts to keep coming, but lenders are pausing for breath.

“It means anyone holding out for significant falls before they buy may have a longer wait than they were expecting. For those with a looming remortgage, it means they may have a bigger mountain to climb in affording their new deal.”

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “While mortgage rates eased dramatically in January as lenders went to war in a bid to secure new business and retain existing clientele, this benefits first-time buyers more than existing homeowners. They still face higher repayments when they roll off cheaper fixed-rate products taken out before rate hikes began.

“Anyone looking to switch should aim to lock in a deal before their product expires or risk rolling onto their lender’s Standard Variable Rate, with the average product sitting at an eye-watering 8.17 per cent.”