The Bank of England has confirmed another base rate cut following the previous reduction on 1 August.
Good news for home buyers and home owners: The Bank of England’s base rate has been reduced from 5% to 4.75% in today’s review.
The Bank’s Monetary Policy Committee voted to reduce the rate in a predicted move. Headline inflation remains below the 2% target at 1.7%, which may have resulted in the rate cut going ahead despite last week’s Autumn Budget, which unsettled some financial experts.
This latest cut follows the previous review on 19 September which saw the base rate held at 5%. Before that, it was reduced from 5.25% to 5% on 1 August.
What does this latest reduction mean for you?
• If you have a fixed-rate mortgage, your monthly payments will remain the same until your fixed rate term ends.
• If you’re on a tracker rate mortgage, your rate and therefore your monthly payments will go down.
• If you’re on a variable rate mortgage, your monthly payments may go down if your lender passes on the saving to you.
Will there be further base rate cuts in the near future? Quite possibly but there’s no guarantee it will happen this year. The next base rate review is on 19 December.
Future base rate changes?
Base rate changes are usually linked to inflation. The National Institute of Economic and Social Research predicts that inflation will exceed 3% at the beginning of next year and remain above target throughout the first half of the year before coming down again.
It has also predicted further base rate cuts for next year, but of course, in this unpredictable world, no one can say for sure what will happen.
If you are a potential first-time buyer, you may have heard that the stamp duty threshold is changing next spring, and this could affect you.
From 1 April, the exemption threshold for first-time buyers will drop from £425,000 to £300,000. This means a first-time buyer purchasing a property could pay approximately £6250 extra in stamp duty if the property is worth £425,000.
So if you want to buy your first home, you’ll need to act swiftly to benefit from the higher stamp duty threshold before it expires.
Similarly, if you’re due to remortgage in the next 12 months, don’t leave it to the last minute. Contact us now and we will do our best to lock in the most competitive rate for you.