Bank of England Base Rate Announcement

The Bank of England’s Monetary Policy Committee has, as expected, today voted by 8 to 1 to cut interest rates for the second time this year by 0.25% to now stand at 4.75%.

Today’s decision means rates are now at their lowest point since June last year.

Andrew Montlake, MD of Coreco mortgage brokers commented, “Whilst this cut will be joyfully celebrated by all those looking to buy or remortgage in the near future, it is important to note that this does not necessarily mean that mortgage rates will drop substantially in the short-term.

“This move comes despite the Budget and the massive £40 Billion tax hike having a potential future effect on inflation and interest rates, as well as the reverberations of the US election result which has sent the US stock market spiralling and weakened Sterling against the Dollar.

“Lenders have already increased their mortgage rates in the run-up to this decision, and it does seem that markets are now expecting rates to fall much slower next year than expected. In an uncertain world, there are a wide range of events that could slow this further.

“However, the good news is that this shows the Bank of England is confident that even amongst all the uncertainty they have now tamed inflation sufficiently to be able to continue with their longer-term plans to reduce interest rates.

“With House Prices continuing to show how robust they are and a looming detrimental change in stamp duty next March, we could be looking at a busy few months for the housing market as people look to take advantage of a buyers’ market whilst it lasts.”