The Bank of England has once again concluded its six-weekly meeting on interest rates, deciding to hold the base rate at 3.75%.
So, what does this mean for homeowners and anyone navigating the mortgage market?
Why has the base rate been held?
The base interest rate is set by the Bank of England and directly influences the benchmark, which represents what lenders charge when you borrow money.
At the Bank’s December meeting, the base rate was cut from 4% to 3.75%. Since then, inflation has edged up slightly, widely seen as the main reason for the decision to pause rather than cut rates further.
Infromation to know: The Bank of England uses the base rate to help control inflation, with a long-term target of 2%. At the time of writing, inflation stands at 3.4%. While this is significantly lower than the peaks seen in recent years, it remains high enough to justify a cautious approach.
By holding rates steady, the Bank can assess whether inflation continues to ease without reigniting price pressures. In short, this decision reflects a careful balancing act between supporting economic growth and controlling inflation.#
What does this mean for your mortgage?
For homeowners, a hold provides stability. Borrowers on tracker mortgages will see no change to their monthly repayments, while those on standard variable rates are unlikely to see immediate changes.
For anyone nearing the end of a fixed-rate deal, this decision suggests lenders may continue to price mortgages cautiously, rather than passing on further reductions just yet.
We asked our Mortgage Protection Adviser, Nicola Henton, her opinion, she said:
“The decision to hold the base rate at 3.75% reflects the Bank of England’s cautious approach as inflation remains above its 2% target. While this won’t provide immediate relief for homeowners hoping for further cuts, it does offer some stability in the mortgage market.
For borrowers, this is a good time to review their options, especially if they are coming to the end of a fixed rate, as planning ahead can make a real difference to long-term affordability.”
While a rate cut may still be on the horizon later in the year, this pause highlights the importance of planning ahead, reviewing your options early and seeking advice tailored to your individual circumstances.
Speak to one of Hello Mortgage’s advisers today!
Tel: 0800 292 2557
Email: hello@hellomortgage.co.uk
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