Bank of England Keeps Base Interest Rate at 5.25%
Thursday 14 December, 2023
The Bank of England again held the base interest rate at 5.25% (14/12/2024). This is the third successive month that the rates have remained unchanged.
The base interest rates continue to remain at their highest level in 15 years. The Bank of England expects inflation to fall to over the next few months and continue to drop throughout 2024, as we see an easing on energy and food prices.
The Bank’s governor, Andrew Baily, has previously stated that "the last mile” is going to be the hardest.
Despite the hold on rates, some predict that there could be another rate rise in the future, potentially topping-out at 5.5%. The vote among the committee on this occasion was 6-3 for the holding of rate, with 3 voting to increase rates to curb stubborn inflation.
It is always difficult to accurately predict what will happen with interest rates, but it is worth considering the potential impacts when making financial plans.
It is worth noting that it can often take a year or even two to see the full impact of interest rate changes. It has been seen that more than half of households with a mortgage have already seen mortgage payments jump. Analysts predict that homeowners will continue to be impacted, as older low interest deals end and they start looking for new mortgage deals.
We continue to strongly encourage clients that, if your existing mortgage deal has six months left until it ends, now is the time to start seriously considering your mortgage options.
Tracy Dove, financial consultant and mortgage broker at Exeter and Basildon, said:
“Although the interest rate has been held again, we are still unable to predict what the affect will be on mortgage deals. Despite the inflation rate coming down a little, it is still thought to remain above the 2% the BoE’s aim for some time to come. This will therefore continue to affect the base rate and make it difficult to predict changes, if any.”
“We therefore, continue to urge you: anyone currently on a fixed-rate mortgage deal that is coming to an end within the next six months, now is the time to take action. We strongly urge them to speak with a mortgage broker for professional and tailored advice.”
If you would like to review your mortgage options, please call your Thomas Oliver Adviser on 01707 872000.
