The Bank of England has held the base rate at 0.1% in June, despite speculation that rates could fall into negative territory to help shore up the economy.
The Bank’s nine-member Monetary Policy Committee voted unanimously to leave the base rate unchanged this month. Some commentators predicted that a rate cut may have been on the cards after inflation, or the cost of living, dropped to a four-year low of 0.5% in May. This was due to sharp falls in the cost of fuel, clothing and footwear. The Bank of England has an inflation target of 2%, so when it falls substantially below this target, there’s more pressure on the Bank to cut rates.
In a statement, the Committee said: “The MPC will continue to monitor the situation closely and, consistent with its remit, stands ready to take further action as necessary to support the economy and ensure a sustained return of inflation to the 2% target.”
Review your mortgage
Although the base rate hasn’t changed this month, it’s still worth reviewing your mortgage to see whether you might be able to remortgage to a cheaper deal.
Mortgage rates are extremely competitive at the moment, so you may be able to make significant savings, especially if you’re currently paying your lender’s standard variable rate (SVR). If you’re not on an SVR, check whether your existing deal has any Early Repayment Charges (ERCs).
If it doesn’t, and you want peace of mind that your payments won’t change whatever happens to interest rates in future, you might decide you want to lock into a fixed rate mortgage.
If, however, you think interest rates are likely to remain low in years to come, and that we may even see them fall further, you may prefer to opt for a tracker mortgage. This type of mortgage tracks the Bank of England base rate, plus a set percentage. Bear in mind though, that these deals can often have a collar below which they cannot fall. Once this is reached, you won’t see your monthly payments drop even if the base rate is further reduced.
Get in touch with us if you’re not sure which type of mortgage is right for you, or you can search for the best remortgage deals here.
Base rate held at 0.1% in June