Bank of England Base Rate

Following its meeting concluding on January 31, 2024, the Monetary Policy Committee (MPC) of the Bank of England made a decision with a majority vote of 6–3 to maintain the Bank Rate at 5.25%. 

Notably, two members voted for an increase in the Bank Rate by 0.25 percentage points, proposing a rate of 5.5%. Conversely, one member expressed a preference for reducing the Bank Rate by 0.25 percentage points, suggesting a rate of 5%.

In reality, the decision to keep the rate the same was widely expected and forecasted. 

Instead, the attention was really aimed at looking for signs from the Bank for a potential timing of rate reductions which would alleviate pressure on consumers and businesses.

Unfortunately, this decision doesn’t really give any indication of this. The ultimate decision will hinge on the issues such as inflation in the coming months.

Mortgage Rates

It’s important to remember that the Bank of England Base Rate doesn’t necessarily affect mortgage fixed rates.

In the main, many mortgage rates have reduced significantly since Q3 2023.

However, in recent weeks there has been a slight increase in fixed rates and from many major lenders. 

Whilst in normal market conditions, this kind of thing happens regularly, many borrowers might be hypersensitive to any upward movement. This is particularly the case for people currently on very low rates who will have to remortgage soon.

As it stands, this feels like more of a plateau rather than any major cause for concern. However, as we know things can change very quickly so it’s best to monitor the market if you’re looking to take out a new mortgage or remortgage any time soon.