The Bank of England voted to keep the base rate at 0.5% today, after recent weak UK growth figures put paid to an increase this month.
The economy grew by just 0.1% in the first three months of this year, according to Office for National Statistics figures released last month, much lower than the Bank of England’s 0.3% prediction and the weakest growth for five years. Typically rate increases happen when the Bank is trying to cool the pace of economic expansion, but with growth currently so slow, it has chosen to hold fire for the time being.
The base rate has been at 0.5% since November last year. Prior to that it was at 0.25%, having dropped to this level in August 2016 following the UK’s referendum vote to leave the EU.
What the rate decision means for you
Those on variable rate mortgages should see their monthly payments remain the same, at least for the time being. However, even though rates haven’t moved this month, many commentators believe that a rate rise remains on the cards later this year, so it’s worth reviewing your mortgage to see if you could benefit from switching to a different deal.
Several lenders have raised their fixed rates in recent months in anticipation of a rate rise. This trend could continue, so if you’re considering locking into a fixed rate deal it could pay to act sooner rather than later, before the best deals disappear.
Even if your current deal hasn’t finished yet, you can secure your next mortgage deal 3-6 months ahead, which means you could time it so that you move straight from one deal to another.
Remember that if you are currently on your lender’s SVR, there are usually much better deals available. According to our research more than 4m homeowners are paying the SVR, despite the fact switching to a cheaper deal could potentially knock hundreds of pounds a year off mortgage costs.
Bank of England keeps interest rates on hold