Bank of England Base Rate

The Bank of England Base Rate kept the rate at 5% at the September meeting as widely expected.

There were some hopes for a further cut, especially as the US had recently reduced their rate by 0.5%. However, some feel that this rate cut was just moving the rate more in line with other countries such as the UK.

With inflation still being a consideration, albeit not changing in the latest figures, the Monetary Policy Committee voted 8-1 in favour of keeping the rate on hold.

Mortgage Rates

Fixed rates have generally continued to reduce. This has also been the case for higher loan to value products (90%+). This could be particularly good news for First Time Buyers or Home Movers who have lower deposits.

Some major lenders repriced their products earlier this month in both the residential and buy to let sectors. These lenders include Halifax, Virgin, Natwest and BM Solutions.

Moneyfacts also reported a significant move with rates earlier this month. This included both mainstream brands and smaller building societies.

Rachel Springall, finance expert at Moneyfacts reportedly said –

“As a new month kicked off, several lenders moved to reduce their standard variable rates, a month after the base rate cut. The market picked up with fixed rate mortgage cuts, which was a positive change from last week’s quiet activity.

“It will be interesting to see how much more lenders are prepared to compete this month, considering swap rate market volatility.”

There were a few lenders who increased their rates, but it’s difficult to say at this point whether this is to do with volatility with swap rates or to maintain service standards.

Nationwide reduced their rates by up to 0.25% recently. Reductions also included higher loan to value products which is good news for borrowers across the board. Hopefully other lenders will follow suit.

Our Thoughts

Although rates continued to reduce with a lot of lenders which is good news for borrowers, the rate of reduction and the frequency felt like a lot less than it has done recently.

With reports of the potential for swap rate volatility and a few lenders increasing their rates, nothing can be taken for granted. Although, hopefully we are moving closer to whatever the new normal will be with interest rates and this will provide more certainty and stability for borrowers.