In a surprise announcement today, the Bank of England has decreased the Base Rate to 5%. What does this mean for the UK economic outlook and, more importantly, your mortgage?
The Bank of England reduced the Base Rate (BBR) to 5% today after nearly a year at 5.25%. Today’s significant economic milestone marks the first drop in the BBR since March 2020.
Market outlook
The 0.25% reduction shows positive signs for the economic outlook, especially ahead of Labour’s Autumn Statement on the 30th October. With clear confidence and stability in the markets, we still expect one further BBR reduction this year, potentially as early as September.
Today’s surprise announcement marks the first Base Rate reduction in four years and contradicts many expert economists’ predictions. With a split decision of five votes to four, the outlook amongst the committee members has changed substantially since June’s vote. Most likely, this is due to two months of inflation stability, which returned to the target of 2% in May, and the fact that the General Election is now behind us.
What this means for your mortgage
Given the economic stability shown today, we hope mortgage lenders will react accordingly and soften their rates slightly. However, many lenders have already costed today’s reduction into their pricing. Therefore, it’s unlikely that we will see a sudden rush of lenders pulling products and reducing rates. Instead, borrowers can look forward to rates softening over the coming months.
Many, although not all, lenders allow you to secure a deal now but switch to a cheaper deal if one becomes available before you complete. If you’re currently in the mortgage application process, it’s worth getting in touch with us to explore your options.
If you’re in the large pool of landlords who have been holding off securing your next mortgage deal, it’s essential you now get in touch with one of our expert brokers. As mentioned above, we can explore your rate options to find the best deal to suit your individual needs, and you may be able to switch it to a cheaper rate if pricing comes down further.
Our whole-of-market access gives you the assurance that you’re accessing the most competitive rate on the market. To see the types of rates you could access, start your search with our FREE buy to let calculator.
Get in touch with our team of experts by calling 0345 345 6788 or submit an enquiry here.
