It means that mortgage borrowers will be left guessing as to which way the Bank of England will go in August when it meets to decide on interest rates.
The Monetary Policy Committee (MPC) has been widely expected to make a rate cut at some point this year and falling inflation has made this increasingly likely, although whether it happens in August or September is anyone’s best guess.
David Hollingworth, associate director at L&C Mortgages, said: “Another month’s reading at the bank’s target rate will buoy the hopes of those wanting a base rate cut sooner rather than later.
“However, many anticipated a further, even if slight, decline in inflation this month and the likelihood of an MPC decision to cut in August will remain in the balance. Although borrowers can still expect to see base rate fall this year, they should also be prepared for rates to be held a little longer.
“On the upside, mortgage rates have been improving in recent weeks. A flurry of price changes is gradually helping to drag fixed rates down, albeit slowly.”
Matt Smith, Rightmove’s mortgage expert, added: “As we get closer to the likely base rate cut, stability in the economy is exactly what we need to keep plans on course.
“Although there is debate around the timing of the first base rate cut due to concerns around service inflation, it is looking increasingly likely that it will either arrive in August or September.
“In the meantime, we expect to see mortgage rates continue to fall back as lenders compete for business.”