The Bank of England’s Monetary Policy Committee (MPC) voted unanimously to keep the base rate at 0.75% earlier this month, amid ongoing Brexit uncertainty.
According to the MPC if, as it assumes, Brexit proceeds smoothly to some form of deal, interest rates “would likely rise” but at a “gradual pace and to a limited extent”.
However, the Committee acknowledged that rates could move in either direction depending on which path the economy takes following the UK’s departure from the EU. If there is a no-deal Brexit, the Bank said this would be likely to lead to further sterling weakness, slower growth and higher prices.
The bank cut its outlook for economic growth in 2020 to 1.3%, down from its previous projection in May of 1.6%.
Until there is greater clarity on what sort of Brexit deal, if any, can be achieved, a rate rise this year appears unlikely, with some market commentators claiming that we’re more likely to see a rate cut before the end of the year.
Take advantage of competitive mortgage rates
Although it’s impossible to know exactly what will happen to interest rates over the coming months, it makes sense to be prepared for every eventuality.
The good news is that there are numerous competitive mortgage deals to choose from, whether you’re looking to buy a property, or remortgage.
Many lenders have also cut arrangement fees on mortgage deals in a bid to tempt customers, with Moneyfacts’ research showing that the average product fee for a 65% loan to value mortgage has fallen by £262 over the year to £881 today. The cost of the average product fee for 95% loan to value mortgages has dropped by £46 over the past 12 months to £914.
Interest rates unchanged in August