The Bank of England’s Monetary Policy Committee voted 5-4 to reduce the base rate by quarter of a percentage point to 4.25% in May, with markets anticipating up to three further cuts this year. Two members voted to cut by 0.50%, while two preferred to maintain base rate at 4.50%
The last time base rate was at 4.25% was in March 2023. Lower than expected inflation in the 12 months to March is thought to have contributed to the Committee’s decision to cut rates this month. The Consumer Prices Index (CPI) measure of inflation eased to 2.6% in March, down from 2.8% in February with economists having anticipated that it would come in slightly higher than this at 2.7%.
Markets are anticipating that, in addition to today, we could see further base rate reductions in 2025, amid fears that UK economic growth this year may be lower than previously anticipated due to the potential impact of the US trade tariffs. The Governor of the Bank of England Andrew Bailey confirmed that more rate cuts are likely in a speech he made in Washington last month.
However, it’s impossible to predict with any certainty when or by how much rates will fall by in coming months, so if you’re looking to remortgage or buy a property, you may want to take advantage of current competitive rates now.
Swap rates, which lenders use to determine their fixed mortgage rates, have eased in recent weeks, with several lenders launching fixed rate deals below 4%, as well as relaxing their affordability criteria.
One option is to secure your next deal now and then keep an eye out for any cheaper deals that might become available before your mortgage completes.
L&C’s Rate Check service can do the hard work on your behalf, enabling you to review your deal at any point before your switch completes, and to transfer to a new deal if a better deal becomes available.
