Despite inflationary pressures, the base rate remains unchanged. What does this mean for mortgage interest rates?
The Bank of England announced on 18 September that the base rate will remain at 4%. This decision comes after a small cut from 4.25% back in August – a move that was narrowly agreed at the time.
Why has the Bank held the rate?
Cutting rates could push inflation higher, but keeping them too high puts extra pressure on an economy that’s already struggling. Inflation is still running high. The latest figures, released on 17 September, showed inflation at 3.8% in the 12 months to August – a 19-month high and nearly double the Bank’s target of 2%.
One key driver has been rising employment costs that businesses are having to manage. Increases in national insurance contributions and minimum wage levels are likely to be passed on to consumers through higher retail prices.
The Bank appears to be holding steady, waiting to see what tax and spending measures the government announces in the upcoming budget.
Will we see a cut this year?
The next base rate review is scheduled for 6 November. However, no further reductions are expected in 2025. That said, forecasts suggest the base rate could go down to around 3% next year if economic conditions are right.
What’s happening with mortgage rates?
While the base rate hasn’t changed, several major lenders – including Santander, HSBC, TSB and Leeds Building Society – have increased fixed-rate mortgage deals in the past week. This has been influenced by rising swap rates (the rates at which banks lend to one another), which directly impact the cost of mortgages.
Are you due to remortgage?
The mortgage market has been unpredictable in recent years, and timing is key. If your current deal ends within the next six months, it’s worth speaking to us now. We can secure the most competitive deal available, and if rates drop later, we’ll resubmit your application to ensure you benefit from the lower rate.