As expected, the Bank of England’s Monetary Policy Committee (MPC) has held interest rates at 5.25% for the seventh time in a row.
Many mortgage industry experts had anticipated that falling inflation – which yesterday hit 2% for the first time in almost three years – would give the BoE confidence to cut the base rate.
Under normal circumstances, the recent fall in inflation would lead to a rate cut – although, as widely predicted in recent weeks, the MPC decided against a rate change with the general election only a matter of weeks away.
Market Financial Solutions chief executive Paresh Raja commented: “Over the past ten months, as the Bank has decided to keep the base rate at 5.25% on seven consecutive occasions, it has been clear that it will delay cuts for as long as it needs to.
“But with inflation now at 2%, and the European Central Bank having made cuts, the pressure is mounting – all signs suggest that, once election turbulence subsides, the Bank will commence rate cuts, although it’s dangerous to take that for granted. All eyes will be on its next meeting on 1st August.”
Elsewhere, NatWest became the first lender to announce mortgage rate cuts across its products ahead of today's decision by the BoE.
Fixed-rate deals have been lowered by up to 0.17 percentage points, with NatWest introducing the reductions after inflation fell to the BoE’s target of 2% yesterday.
Co-operative Bank has also reduced loans by up to 0.22 percentage points, while Nottingham Building Society has lowered deals by 0.24 points.
