The Bank of England has decided to keep the base rate at 5% in today’s review.
The Bank’s Monetary Policy Committee has voted to keep the rate at 5%. In the last review on 1 August, the rate decreased from 5.25% to 5%, marking the first reduction in four years.
While some had hoped that the rate would be reduced amid lenders cutting mortgage interest rates, it was not to be on this occasion.
The Bank’s decision is generally based on how quickly prices are rising, the growth of the UK economy and the latest employment figures. The Bank aims to keep inflation under control.
CPI inflation (the change of prices in a typical basket of goods and services) increased to 2.2% in July from 2% in June. This increase was unexpected and marked the first inflation rise this year. The Bank aims to keep inflation at around 2%.
Mortgage rates are going down
However, there has been good news recently. Many major lenders have reduced their interest rates on two—and five-year fixed-rate deals and variable-rate deals.
At the time of writing, the lowest mortgage rates include a two-year fixed rate deal, which stands at 4.19% (on a 75% loan-to-value) and 3.92% on a five-year deal.
The next base rate review takes place on 7 November. Analysts expect one or two rate cuts before the end of this year. However, circumstances can change, so we can’t predict for sure what will happen. We will keep you updated.