More rate cuts coming?
Following the Bank of England’s decision to reduce the base interest rate from 5.25% to 5%, lenders are competing aggressively to offer the most attractive rates. The move is anticipated to help revitalise the market for intermediaries, as those looking to enter the property market start to take action.
The reduction in the consumer price index (CPI) to the Bank’s target of 2% has also led analysts to predict further rate cuts from the Monetary Policy Committee (MPC) later this year. And pressure for more interest rate cuts is growing as global stock markets start to jitter.
Janet Mui, head of market analysis at investment management firm RBC Brewin commenting on global share prices told Sky News yesterday that the BoE “will certainly feel that pressure to cut interest rates further. If you have a floating rate mortgage, you could potentially see more relief down the line. And if you’re going to remortgage or have a new mortgage, I think you’re very likely to be getting a much lower rate.”
Despite the base rate cut benefiting those with base rate tracker mortgages or payments linked to their lender’s standard variable rate (SVR), nearly seven million of the UK’s 8.4 million residential mortgages are on fixed rates, meaning most homeowners will not see an immediate change.
David Hollingworth of L&C Mortgages told GB news: “I’d fully expect further improvements and more lenders looking to break through to sub-4% five-year rates. It continues the edging down in rates and there’s likely to be more looking to join in. The cut to base rate last week came sooner than many had expected and that should strengthen anticipation that another cut comes before the end of the year. The Bank of England has been keen to downplay that cuts will come thick and fast, but this should help to reduce costs for lenders.”
