A ‘tracker mortgage can be pretty jolly’ as the Bank of England keeps interest rates at 5.25%

The Bank of England has held interest rates at 5.25% and the governor Andrew Bailey has suggested that cuts are unlikely.

Bailey said there “is still some way to go” as policymakers continue to attempt to bring inflation down further, the bank’s policy is to remain “restrictive for an extended period of time.”

The Bank’s Monetary Policy Committee (MPC) voted in favour of holding the base rate which is at a 15-year high.

On Thursday, six members of the MPC voted in favour of holding the base rate at 5.25%, but three members wanted to raise interest rates to 5.5%.

Bailey said, “We’ve come a long way this year, and successive rate increases have helped bring inflation down from over 10% in January to 4.6% in October, but there is still some way to go.

“We’ll continue to watch the data closely, and take the decisions necessary to get inflation all the way back to 2%.”

Newspage asked a selection of mortgage brokers, property and financial services experts if this was the right decision, and for their key takeaways from the minutes

Leigh Rowland, director at Pontypool-based mortgage broker, Mortgages Made Easy said,  “It is the season to be jolly and the majority of homeowners with a tracker mortgage can be pretty jolly today following the Bank of England’s decision to leave the base rate at 5.25%.

“Turkey and all the trimmings will be on the table at Christmas as there are no changes to monthly payments. Those on fixed rates coming to an end in 2024 will also be able to enjoy the warm fuzzy feeling from the mulled wine as a degree of economic stability looks to be upon us. For those on variable rates, who can say what the lenders will do but let’s hope it’s good news or no news so everyone can enjoy the festive period.”

Peter Stokes, director at Wimborne-based mortgage broker, Davidson Deem said, “Today’s base rate hold will not have surprised the markets. The consensus now is that the base rate has peaked and the focus is increasingly on when the first cut will be. It’s shaping up to be in 2024 but the next set of inflation data will influence the exact timing.”

Jack Tutton, director at Fareham-based broker, SJ Mortgages said,  “The Base Rate was widely expected to be maintained at 5.25%, however, three of the nine members of the committee voted to increase it again which is interesting, as they must clearly feel that inflation isn’t falling at the required rate.

“This comes off the back of the US Fed stating that they expect to be able to reduce rates next year. This latest decision will be welcome news to business and mortgage holders, especially as potentially up to 1.6 million people are coming to the end of their mortgage deal in 2024. Mortgage lenders are battling it out to be top of the best buy tables.

“Hopefully with the news today, this will allow them to be more aggressive and continue to reduce the cost of fixed-rate mortgage products into the new year.”