The Bank of England has kept interest rates on hold at 4% this month, but hopes are growing that a cut could come before Christmas.
Five of the Bank’s Monetary Policy Committee members voted to keep rates on hold, with four voting in favour of a cut. Although inflation numbers came in lower than expected at 3.8% in the year to September, it remains nearly double the Government’s target. Andrew Bailey, Governor of the Bank of England said that inflation is expected to have peaked, but there will need to be evidence that it is falling before rates can be reduced again.
If October’s inflation numbers are lower and provided there are no nasty surprises in the Budget which could push living costs higher, commentators expect that we could see a rate cut when the Committee next meets on December 18th. Latest wage growth data shows that it eased in September from its summer highs, while economic growth remains anaemic, boosting the odds of a pre-Christmas cut.
Mortgage rates ease despite no cut
Despite the fact there hasn’t been a base rate reduction this month, fixed mortgage rates have edged downwards in recent days. Several lenders, including HSBC, Santander, Natwest and TSB have trimmed some of their fixed rate deals, providing relief for those buying a home or who are remortgaging.
Fixed mortgage rates tend to fluctuate even when the base rate is stable, as they are more closely linked to swap rates. These are the rates that lenders must pay other financial institutions to acquire fixed funding for a set term and so have a big influence on the fixed mortgage rates lenders can offer.
For homeowners coming to the end of a fixed deal, the recent dip in mortgage rates could make now a good time to review your options. Even a small reduction in rate can make a noticeable difference to monthly repayments.
