Bank of England Base Rate Announcement

The Bank of England’s Monetary Policy Committee (MPC) has today announced that it has CUT the Bank Base Rate from 4.00% to 3.75%.

With this announcement of a 0.25% cut, borrowers will be celebrating some early Christmas cheer. Given recent fallsin inflation and anaemic growth, markets suggest we could even see a further cut within the next few months before levelling out.

Given the tightness of the vote, however, it seems the Monetary Policy Committee may have other ideas and remains concerned that the inflationary lag may linger for some time, as the tightrope walk between inflation and growth remains precarious.

Today’s cut will have the knock-on effect that mortgage rates are likely to decrease slightly and trigger a mortgage melee in the New Year. Lenders will be very keen to make the most of a market that is still waiting for pent-up demand to be released, and mortgage rates that consistently start with a 3 should be the norm for the year ahead.

A word of caution, however, to those waiting for rates to fall further or expecting an era of ultra-low rates again,  this does not appear to be the case. The first part of next year could be a golden era to buy, as mortgage affordability improves before house prices begin to rise again.