Bank of England reveals interest rate decision
The Bank of England’s monetary policy committee has held base rate at 5.25% for the sixth time in a row.
The news was widely expected, although some agency industry figures held out a distant hope that rate cuts may begin this month, despite the headline rate of inflation running at 3.2%, so well above the government target of 2%.
Emma Wall, head of investment research and analysis at Hargreaves Lansdown, says Bank of England governor Andrew Bailey had not given any "forward guidance" on a change, which would be expected if he felt a drop was on the cards.
But she adds that “rate cuts will be coming in the UK, and in Europe,within the next couple of months" with yesterday’s surprise move by the Swedish national bank to cut rates an indication of what is to come in this country in June and beyond.
According to Rightmove, the average five-year fixed mortgage rate is now above 5% for the first time since January, while average two-year fixed mortgage rate currently stands at 5.41%, up from 4.84% a year ago.
A spokesperson for independent mortgage broker John Charcol says: “Until a reduction in the bank rate occurs, there will be a period of uncertainty that prompts markets to speculate and continually adjust their forecasts. This situation is expected to lead to an ongoing phase of repricing by lenders.
“Lenders are continually adjusting their profitability margins in response to changes in funding lines and shifts in market competition. This adjustment process is a direct reaction to the uncertain financial environment, as lenders strive to maintain their competitive edge while managing their financial risks.
“Swaps have reduced slightly in recent days as markets price in a rate reduction, which should pave the way for lenders to reprice marginal decreases over the next fortnight.”
