Here at Quick Mortgages, we know that news from the Bank of England is always top of mind for homeowners and prospective buyers. Yesterday, June 19th, the Monetary Policy Committee (MPC) announced their latest decision: the Bank Rate will remain at 4.25%. While some might have hoped for a cut, this hold comes with important insights into the UK’s economic landscape and what could be next for your mortgage.
Why the Hold? A Balancing Act
The Bank of England’s decision to maintain the rate at 4.25% wasn’t a surprise to many economists. Inflation, though falling, remains above the Bank’s 2% target, currently standing at 3.4% in May. This “sticky” inflation is a key concern for the MPC.
However, it’s a delicate balancing act. While high rates help to cool inflation by making borrowing more expensive and encouraging saving, they can also dampen economic growth. The Bank noted that underlying UK growth remains “weak,” with the economy expanding strongly at the start of 2025 before a sharp contraction in April. There are also signs of a softening labour market, with wage growth slowing and unemployment rising.
Adding to the complexity are global uncertainties. The ongoing conflict between Israel and Iran, major oil producers, has already led to a significant rise in oil and gas prices. As Deputy Governor Clare Lombardelli explained, these “tragic” and “deeply worrying” events contribute to the “uncertainty facing the economy” and influence rate decisions.
What This Means for Your Mortgage Right Now
If you’re currently on a fixed-rate mortgage, yesterday’s announcement won’t immediately change your monthly payments. Your rate is locked in for the duration of your fixed term. However, if your fixed term is coming to an end in the near future, it’s crucial to start thinking about your options now.
For those on a tracker mortgage, your payments are directly linked to the Bank of England’s base rate. So, with the rate being held, your payments should remain consistent for now.
If you’re on your lender’s Standard Variable Rate (SVR), your payments might not change immediately, as lenders have discretion over their SVRs. However, SVRs are typically much higher than fixed or tracker deals, so if you’re on an SVR, exploring new options is almost always a good idea.
Looking Ahead: When Could Rates Go Down?
Despite the current hold, the Bank of England has hinted at further interest rate cuts potentially as soon as August. Governor Andrew Bailey stated that interest rates “remain on a gradual downward path.” Market expectations are pricing in an August cut, with some predicting two further cuts by the end of 2025, potentially bringing the base rate down to around 3.75%.
However, this is not a pre-set path. The Bank will continue to monitor key economic data, including inflation figures, labour market trends, and global developments. Any significant shifts could impact the timing and pace of future rate cuts.
As Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted, “Hopes for a summer rate reduction haven’t completely faded, with bets ramping up that a cut in August could provide the rays of relief that borrowers have been waiting for.”
Our Advice for Quick Mortgages Clients
While the immediate impact of yesterday’s announcement on your mortgage might be minimal, it’s a timely reminder to review your current situation.
- If you’re on a fixed rate coming to an end: Don’t wait until the last minute! We can help you explore new fixed-rate deals now, often up to six months in advance, to secure the best possible rate and avoid rolling onto a potentially higher SVR.
- If you’re on an SVR or tracker mortgage: This period of potential stability, with hints of future cuts, could be an opportune time to assess if a new deal would save you money. Even a small reduction in your interest rate can make a significant difference to your monthly payments over the long term.
The mortgage market is constantly evolving, and having expert guidance can make all the difference. At Quick Mortgages, we are here to help you navigate these changes and find the best mortgage solution for your individual circumstances.
——–
Disclaimer:
This article is for general guidance purposes only and does not constitute legal, financial, or professional advice. Mortgage products and their terms can vary, and it is important to seek advice from a qualified, regulated professional who can assess your individual circumstances. Please ensure you consider your unique needs before making any financial decisions.
While every effort is made to ensure that the information provided on this blog is accurate and up-to-date, we do not guarantee its completeness or accuracy. The mortgage market can change rapidly, and the information on this blog may become outdated. We recommend verifying any information before acting on it and seeking tailored advice.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
