The Bank of England voted to reduce the base rate by 0.25% this month, from 5.25% to 5.00%.

This is after seven consecutive holds dating back to when the rate was set at 5.25% in August last year.

Prior to this, the rate had seen 14 consecutive increases, in a bid to curb inflation.

It was a close call. The Monetary Policy Committee voted 5-4 in favour of the cut.

Although there have been calls for further cuts in the future, recent inflation data showing an increase to 2.2% may cause some to ask whether this will be the case.

Mortgage Rates

The good news for borrowers is that mortgage fixed rates have reduced significantly over the last few weeks.

Moneyfacts reported that average fixed rates had fallen to the lowest rate since March.

Many mainstream lenders have been competing for business with rates that are lower than 4%.

This week, Nationwide and Barclays released product ranges with rates starting from 3.83%. Of course these aren’t available or suitable for everyone, but it has been some time since the market has seen rates like this.

Other lenders to join the so-called ‘rate wars’ include Halifax, Virgin Money and Natwest.

Our Thoughts

It’s good to see rates finally start coming down as the foundations have been there for at least 2-3 months.

Activity still seems to be slightly subdued ,but this could be due to a combination of factors such as seasonal effects, the recent election and people waiting to see how low rates might actually go.

If things continue this way, we could expect activity levels to improve and potentially quite quickly, perhaps with a sharp increase.