The Bank of England has held the interest rate steady in its latest Monetary Policy Committee (MPC) meeting, opting to keep the base rate at 4.25%. This move reflects a cautious response to ongoing global and domestic uncertainties affecting the economy.
Six members of the MPC voted in favour of maintaining the current rate, while three supported a reduction to 4%. According to Bank of England Governor Andrew Bailey, the “highly unpredictable” global landscape, including concerns about inflation, the state of the US economy, and conflict in the Middle East, meant that holding the interest rate was the most prudent option.
A Gradual Downward Trend
Two years ago, the interest rate stood at 5%, and the average two-year fixed mortgage deal was 5.35%. Since then, the Bank has implemented several cuts. The most recent adjustment was a 0.25 percentage point reduction in May, with the average two-year fixed rate dropping to around 4.39%.
Although the MPC chose not to lower the base rate further this time, many financial analysts anticipate continued downward movement. Some forecasts suggest that we could see at least two more cuts before the end of the year. The MPC’s next meeting is scheduled for August, though nothing is guaranteed, given the complexity of the current economic outlook.
How the Interest Rate Affects the Housing Market
For buyers, especially those looking to enter the market for the first time, falling interest rates have been encouraging. According to recent data from Hamptons, buyer demand in May reached its highest level in four years. The number of first-time buyers was also up 4% compared to the same period last year.
Lower mortgage rates can make monthly repayments more manageable, opening up opportunities for more people to climb the property ladder. However, with so many factors influencing the market, there is rarely a perfect time to move.
If you’re considering buying or selling, it may be worth speaking to a broker and exploring mortgage products now rather than delaying your plans in anticipation of further cuts. Even if the interest rate does fall again later this year, properties you’re interested in may not stay available.
The Importance of Planning Ahead
Securing a mortgage in principle is a wise first step. It gives you a realistic picture of what you can borrow and shows sellers you are a serious buyer. Bear in mind, though, that this agreement is not legally binding. Once you find a property you love, you’ll need to submit a full mortgage application.
As always, shop around for the best deals and factor in any additional fees or charges associated with the mortgage offer.
If you’re thinking of selling, we recommend arranging a home valuation to get an up-to-date understanding of what your property is worth in the current market.
In uncertain times, informed decision-making is key. Whether you’re a first-time buyer, downsizer or looking to move up the ladder, understanding how the interest rate affects your options is vital.
If you’d like advice on your next move or to book a free valuation, get in touch with our team today. And if you know someone who may benefit from this update on the interest rate, please feel free to share this blog with them.
Important Links
Book a Valuation
Visit our Royston Facebook Page
Visit our Newmarket Facebook Page
View our Ware Facebook Page
