Surging interest rates have caused mayhem in the property market over the past year, and many mortgage borrowers will hope today’s decision will see lenders reduce rates further in anticipation of the base rate falling later this year.
Lenders have already been cutting mortgage rates ahead of the interest rate decision.
Halifax announced that it was reducing mortgage rates by 0.53 percentage points from Thursday. NatWest withdrew a handful of its loans from the market in a sign of rate changes to come, while Leeds Building Society cut its rates by 0.5 percentage points.
While the prospect of falling interest rates is good news for borrowers, they are bad news for savers with banks cutting the rates they offer on accounts in response.
First-time buyers and homeowners remortgaging
While those already on a fixed-rate mortgage will be unaffected by a base rate decision, the 1.5 million people needing to remortgage this year will almost certainly see their payments go up, despite falling rates, because of how cheap home loans were two years ago.
The good news is many brokers believe that rates will continue to fall over the coming year.
Nicholas Mendes of broker John Charcol said, “Despite UK shop price inflation easing in January to its lowest rate in almost two years as retailers heavily discounted goods during a weak sales period, core inflation remained at 5.1pc in the year to December.
“Markets had subsequently been pricing in that the Bank of England will hold the bank rate at 5.25pc, with any rate cuts to start in June as inflation is expected to slow towards the central bank’s 2pc target.
“Despite today’s announcement, mortgage rates are expected to continue to steadily reduce over 2024.”
