Easy Street Financial Services 9 Interest Rates 9 May Update – Interest Rates
May Update – Interest Rates
May 23, 2025

The Bank of England reduced the base rate from 4.5% to 4.25% at the last committee meeting. However, this was only voted by a majority of 5-4.

Two members preferred to reduce the rate by 0.5% to 4% and two preferred to maintain the Bank Rate at 4.5%.

This was a welcome cut that was widely anticipated given the data at the time.

However, inflation has since taken an upward trend, with the Consumer Prices Index (CPI) increasing by  3.5% in the 12 months to April 2025.

This will put pressure back on the Bank of England and potentially put any more imminent rate cuts in doubt.

Mortgage Rates

Due to the widely anticipated rate cut, mortgage rates had already priced this in which led to reductions in fixed rates across the market.

Many mainstream lenders had been releasing sub 4% interest rates which has obviously been welcomed by borrowers. This is especially the case for people remortgaging and having to move away from historically low interest rates that started with a 1 or a 2.

However, due to the recent inflation data, many lenders have paused further reductions and some have even started to reverse this and put their rates up.

Our Thoughts

Even though it’s likely that mortgage rates may increase due to the inflation data, we would not anticipate for this to be significant. Rates will continue to be relatively low compared to where they have been over the last 12 – 24 months.

Having said that, if you are remortgaging and coming off of a low rate, every penny counts.

It could be worth securing a mortgage as quickly as possible, but have the flexibility to change this should rates reduce. 

Obviously don’t complete before the end of your current benefit (fixed) period. This would be a ‘double whammy’ as not only would your rate increase, but you may also have to pay an early repayment charge for the privilege.

However, if you can reserve a product today (either with your existing lender or another) this could protect you against any future rises and give you the opportunity to benefit if rates reduce again before you need to switch.

If you adopt this approach, you just need to make sure the offer will be valid for long enough (it won’t expire before you need it), has the flexibility to reserve / switch without any significant costs and you continue to monitor the market.

If you need any help or would like to discuss this, please feel free to get in touch.

Information correct as of May 2025.

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