The Bank of England’s Monetary Policy Committee (MPC) voted unanimously to leave the base rate unchanged this month, at its last meeting before the UK is due to leave the European Union.
The base rate has remained at 0.75% since August 2018. The next MPC meeting will take place on 7th November, a week after the UK’s scheduled departure from the EU on 31st October.
There was limited pressure on the committee to raise rates this month following inflation figures announced on Wednesday, which showed the cost of living in August fell to 1.7%, the lowest inflation rate since 2016.
Where next for interest rates?
Ongoing political and economic uncertainty as we approach Brexit makes it impossible for anyone to predict which way interest rates will move next.
The Bank of England said that rates could move either up or down depending on the economic impact of Brexit.
If the Prime Minister does manage to agree a deal with the EU before the end of October, the MPC has said that a rise in rates is likely, but any increases would be “at a gradual pace and to a limited extent.”
Even though no-one knows which direction rates will move in the months to come, it makes sense to be prepared.
For example, if you’re concerned that you might not be able to afford steeper mortgage payments should interest rates rise in future, you might want to consider locking into a fixed rate mortgage whilst rates are still low.
This can provide peace of mind that your mortgage payments will remain the same however much interest rates increase by.
If, however, you think rates will remain low for the foreseeable future and you’re confident you could cover the cost of potentially higher payments if they do go up, you may prefer to choose a tracker mortgage, which tracks the Bank of England base rate plus a set percentage.
Seek expert advice if you need help finding the best deal based on your individual circumstances.
Base rate left on hold in run up to Brexit