Interest rates were kept on hold in February, but the Bank of England warned that rates could rise “somewhat earlier and by a somewhat greater extent” than previously forecast.
The Bank’s Monetary Policy Committee (MPC), which determines interest rates, voted unanimously to keep the base rate at 0.50%. The last time the Committee voted to increase rates was in November last year. Prior to that, the base rate had been at 0.25% for over a year, having been reduced to this level in August 2016 following the UK’s referendum vote to leave the EU.
However, high inflation combined with faster than expected expansion of the economy means that a rise could be imminent, with many commentators anticipating a quarter percent increase in May.
The Committee said that developments regarding the United Kingdom’s withdrawal from the European Union remain the most significant influence on “and source of uncertainty about” the economic outlook.
Is it time to review your mortgage?
Several lenders have already started raising their mortgage rates in anticipation of a rate rise, with Nationwide Building Society, Tesco Bank and Halifax among them.
More lenders may increase rates in coming weeks. That means if you’re currently on your lender’s standard variable rate (SVR) but are considering locking into a fixed rate deal for protection against rising rates, you may want to act sooner rather than later, before the best deals disappear.
More than 4m homeowners are on SVRs, despite the fact these are usually much more expensive than other mortgage rates.
Remember that if you’re locked into a mortgage deal which is due to finish soon, you can secure your next rate as much as 6 months ahead, so you may also be able to take advantage of current competitive mortgage deals while they are available.
Interest rates kept on hold - but rate rises could be on the cards