Steady Bank Rate at 5.25%: A Glimmer of Hope for Future Mortgage Cuts:

The Bank of England has maintained its Bank Rate at 5.25% for the fourth consecutive announcement since its increment from 5% in August 2023. Despite hopes for a rate decrease, cuts are not anticipated until later this year, though mortgage costs have been on a decline.

• The Bank Rate remains at 5.25%, with inflation still above the Bank of England's 2% target, recorded at 4% in December 2023.

• Global events could influence a rise in inflation in the latter half of the year.

• A rate reduction might be seen around May or June 2024.

Steady Bank Rate: Explained The decision to keep the Bank Rate steady came from a 6-3 vote by the Bank of England's monetary policy committee, highlighting a cautious approach due to potential inflation risks. Despite reduced energy prices and slower wage growth, inflation's fluctuating nature, influenced by international tensions and supply chain disruptions, warrants careful observation. Predictions suggest a temporary dip to 2% inflation by the second quarter of 2024, followed by a gradual increase.

Impact on Mortgage Rates: For those on variable mortgage rates, this month brings no relief in mortgage costs. However, new mortgage deals have seen rate reductions over the past six months, benefiting particularly first-time buyers. Despite this, mortgage costs remain significantly higher compared to rates a few years back, impacting both new borrowers and those remortgaging.

Mortgage Costs vs. House Prices: The rise in mortgage rates in 2023 led to a decrease in property purchases and mortgage lending. Nonetheless, a majority of homeowners witnessed stability or growth in their property values, with some regions experiencing notable increases. This resilience contrasts sharply with the more substantial gains seen in 2022.

Mortgage Market Forecast: Mortgage rates are expected to remain relatively high by past standards but could stabilise as rate cuts are anticipated in the near future. These adjustments could provide relief for prospective homeowners and those looking to refinance. Experts suggest the importance of consulting with mortgage brokers to navigate the evolving landscape and strategise effectively.

In conclusion, while the immediate outlook for rate cuts remains cautious, the decreasing mortgage costs and potential for rate reductions in the near term offer a glimmer of hope for the housing and mortgage markets.

Written by Veera Josey, 22nd March 2024