The Bank of England has announced that the base interest rate will remain at 4%, following a narrow 5-4 vote among policymakers. This decision comes as the Bank signals that inflation has likely peaked and is expected to continue easing gradually through 2025.
Governor Andrew Bailey commented that the Bank would “prefer to wait and see” how inflation trends develop before making any rate cuts. With inflation currently at 3.8%, still above the target of 2%, the focus remains on ensuring price stability before borrowing costs are reduced.
So, what does this mean for homeowners, landlords, and those looking to buy in the near future?
For Homeowners
For those with fixed-rate mortgages, today’s decision won’t bring immediate change, but it does indicate that the market may be entering a period of stability. Those nearing the end of their fixed terms could see remortgage deals remain steady, with lenders anticipating possible rate reductions in the coming months.
Homeowners on variable or tracker mortgages will see no change to their monthly payments for now, but this pause could signal the start of a gradual downward trend in rates later in the year, welcome news after several years of rising borrowing costs.
For Landlords
Landlords will also benefit from a period of stability in borrowing costs, allowing for better financial planning. The decision may encourage some to review their mortgage options or consider new investments while rates remain steady.
However, with the Bank warning that inflation pressures have not fully disappeared, landlords should continue to factor in potential fluctuations and maintain a focus on efficient property management to safeguard yields.
For Buyers
For buyers, particularly first-time purchasers, the Bank’s decision may help restore confidence in the market. Mortgage rates are not expected to rise further in the short term, and as inflation continues to ease, there’s hope that affordability could gradually improve.
However, with speculation around possible tax changes in the upcoming Budget, including adjustments to income tax or National Insurance, it’s important for buyers to stay informed and seek professional advice before making major financial commitments.
Looking Ahead
Economists expect the Bank to begin cutting interest rates in the coming months, possibly as early as December, depending on further data on inflation and employment.
While it may take time for these changes to filter through to mortgage products and affordability, the message from the Bank is clear, inflation has peaked, and stability is slowly returning to the economy.
At Boxall Brown & Jones, we continue to monitor market trends closely to support our clients through every stage of the property journey. Whether you’re looking to buy, sell, or let, our experienced team can provide clear, informed advice tailored to your goals.
Contact us today to discuss your next move or visit www.boxallbrownandjones.co.uk to explore our latest properties.