Bank of England holds interest rates at 5.25% for second time

3rd Nov 2023
Richard Crathorne
Bank of England holds interest rates at 5.25% for second time - John Shepherd

The Bank of England has, for the second time in a row, opted to maintain the interest rates at the 5.25% mark. This particular decision, which has been well-received by many, suggests a semblance of stability for both current homeowners and potential buyers alike.

This widely-anticipated choice was made following September's inflation data, which remained steady at 6.7%, thus alleviating some of the pressure on the Monetary Policy Committee of the Bank. The vote to retain the current rate saw a majority of 6 to 3, indicating a cautious approach to further interest rate increases given the current economic landscape.

For the approximately 2.2 million homeowners with variable-rate mortgages who have been grappling with rising interest rates since December 2021, this decision comes as a welcome relief. Over the past two years, the average Standard Variable Rate (SVR) has surged from 4.4% to 8.2%, making the pause in rate hikes a breath of fresh air for many in this category.

Nonetheless, experts do advise homeowners with SVRs to explore potentially more cost-effective alternatives, including the possibility of switching to better mortgage deals.

The ongoing stability in interest rates also offers a favourable environment for those considering new mortgage arrangements. Recent times have witnessed a decline in mortgage rates, reflecting a competitive market landscape. Notably, the best two-year fixed rates have seen a one-percentage-point decrease over the last two months. Furthermore, there is an increased availability of five-year fixed-rate deals below 5%, which, when combined with the current interest rate stability, may indicate a phase of market equilibrium.

Despite this short-term respite, the Bank's cautious stance is in tune with the unpredictable nature of economic conditions, particularly in light of potential inflation risks arising from global events, such as those unfolding in the Middle East. The Bank's "wait and see" approach demonstrates a prudent perspective regarding any further tightening of monetary policy.

If you are considering a change or are curious about the current market valuation of your property please get in touch and book a valuation today.