The Bank of England’s Monetary Policy Committee (MPC) voted 7-2 to hold base rate at 5.25%for the seventh consecutive time in June, with homeowners hoping to see a cut later this summer. Two members voted for a 0.25% cut to 5%.
Some economists expect to see the first rate reduction of 2024 in August and are predicting that we might see a further cut before the end of the year. However, financial markets have shifted in recent weeks due to ongoing uncertainty not only over when rates may fall this year but also by how much.
May’s inflation data, released this week, shows inflation hit the Government’s target of 2% last month, dropping from 2.3% in April. That is certainly good news but the Bank of England has reiterated that it won’t cut until it feels that inflation is under control.
With a general election in July, another set of inflation and labour data due before the MPC meets again in August, a lot could happen between now and then, so a rate cut is by no means guaranteed.
Risks of waiting for rates to come down
It might be tempting to put off remortgaging in the hope that the base rate comes down in August, but whilst the political and economic situation remains uncertain, if you spot a mortgage deal you like, it’s worth trying to secure it sooner rather than later.
No-one knows exactly what will happen to mortgage rates in coming months, but if you’re worried about locking into a fix at the wrong time, it’s worth remembering that signing up to a deal that starts in a few months’ time doesn’t mean you’re committed to it.
Our Rate Check service, for example, allows you to secure your next deal up to six months before you need it to begin, protecting you against any future potential increases, and also enabling you to review rates at any time until you make the final switch to a new deal.
That means if rates fall before your new deal is due to begin, you can check whether you might be better off choosing an alternative deal. You can ask for a rate review at any time, although the closer you get to your completion date, especially if you’re switching to a new lender, you may decide to stick with the deal you’ve chosen rather than risk delaying completion by having to start from scratch.
