The Bank of England has, as was widely anticipated, confirmed the Monetary Policy Committee has held base rates at 4.5%. Despite hope for further interest rate falls in 2025, many commentators felt a further cut was unlikely so soon after February’s decision. And while inflation, currently 3%, remains above the Bank of England’s target of 2% further interest rate cuts are likely to be few and far between.
After the sizeable increases in base rate over the last 18 months, lenders have reacted to greater stability according to Rightmove’s latest weekly mortgage tracker. The lowest available mortgage rate is now a 2-year fixed rate, for those with a 40% deposit.
Matt Smith, Rightmove’s mortgage expert said
“Average mortgage rates at the top-end of the market have fallen more quickly than for those with the smallest deposits over the past year. Someone with a 10% deposit is still looking at an average 5-year mortgage rate of 4.91%, only slightly down from 4.99% at this time last year. By contrast, today someone with a 40% deposit is now looking at an average 5-year mortgage rate of 4.20%, down from 4.36% – and we are still seeing some products below the 4% mark in this bracket. So while borrowing power has improved for first-time buyers, higher, and slower falling, mortgage rates for those with smaller deposits is still stretching affordability.”
| Term | Lowest rate | Weekly change | Yearly change |
| 2-year fixed | 3.86% | -0.09% | -0.60% |
| 5-year fixed | 3.96% | +0.04% | -0.17% |
Source: Rightmove
Calling on lenders to go further Samantha Lindsay, Mortgage and Protection Adviser at My Mortgage Angel, said
“The hold on the interest rate today was widely expected and comes as no surprise. There is still too much uncertainty in the world – between US politics, global economic instability, the heightened situation in Ukraine, a looming Budget announcement and inflation still a point away from target, lots of factors need to stabilise before further cuts are likely.”
“We briefly saw the return of sub 4% mortgage rates last month, but these were just flashes in the pan. Some lenders offered these then withdrew them at short notice which just created more panic and uncertainty for borrowers. What we really need to see is lenders working together to create a more sustained move towards lower mortgage rates for all.”
Joe Pepper, UK Chief Executive Office at PEXA, said:
“There are 1.8 million fixed-rate mortgages set to expire this year, leaving a huge amount of people wanting more favourable mortgage rates. Instead, they are met with more uncertainty as today’s decision to hold the base rate will likely keep mortgage rates higher, at least in the short term.
“Those not willing to commit to a fixed rate in this environment are left to confront the reality of dropping onto their lender’s SVR in the hope that a lower rate will come up. That leaves them vulnerable to inflationary pressure and higher interest rates, but it also means there is a lot of pressure building behind the scenes of the property market. When rates drop, and they will, there will be a rush from borrowers to get their deal over the line.
“The problem is the infrastructure supporting conveyancers is just not equipped for such a stampede, and the impact of this is being felt in the immediate term by those looking to get their transactions completed before the Stamp Duty changes in April.
“It is clear digital transformation is needed to improve capacity for conveyancers, otherwise trying to stimulate the market is like the industry putting its foot on the accelerator with the handbrake still on.”
Robin Rathore, CEO of Bamboo Auctions, said the stability of the hold is welcome:
“Although inflation has increased slightly over the last few months, its sensible to hold rates as they are. The mortgage market appears to have already priced this into the rates on offer so we don’t expect to see any significant impact to the property market following this month’s announcement.
“The stability is welcome and we are seeing a number of great opportunities coming to market. Now is a great time to sell and the agents we work with are seeing faster transaction times with strong bids and offers being placed online by buyers across the country. As we head towards the seasonal spring bounce we expect to see more active buyers coming to the market and more sellers looking to list their properties.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said
“Even the most avid supporter of rate cuts likely saw today’s decision coming – as did the financial markets with many already pricing in this outcome. As is often the case, it also mirrors yesterday’s decision by the Fed to keep interest rates unchanged amid similar economic uncertainty, slowing growth and higher inflation. We continue to hold our breath that future cuts are indeed coming, although like our US counterparts, the pace and frequency depends entirely on the economic outlook at home and abroad, and inflation dynamics – which in the UK remains sticky and highly volatile.
adding future rate cuts can’t come soon enough but warned the Spring Statement could still surprise us.
“Thankfully, lenders continue to play their part to support borrowers and from our perspective, there is still appetite within the market with buyer registrations, valuation requests and mortgage appointment numbers all remaining consistent. It’s encouraging to see there is still a clear demand for advice and advisers will continue to play a pivotal role as clients try to navigate an ever-changing market landscape.”
Ben Thompson, Deputy CEO at Mortgage Advice Bureau suggested the Bank of England were ‘playing it safe’ and he current hold should give much cause for concern. Attention now turn to May’s decision where the current forecast is a second cut of the year concludes Matt Smith. .
