Bank of England holds Base Rate at 5%

Bank of England holds Base Rate at 5% amid falling swap rates and mortgage costs

The Bank of England has announced today that it will be holding the base rate steady at 5%. This marks a continuation of the current rate, which has been in place since the last adjustment earlier this year. However, while the base rate remains unchanged, there have been significant movements in swap rates—the rates banks pay to borrow money. Over the past few days, swap rates have been on a downward trend, indicating that the cost of borrowing for lenders is falling. As a result, the latest Bank of England data reveals that 5-year fix 75% LTV mortgage has dropped to 4.3%, the lowest level seen in the last two years.

Although the base rate remains high, the reduction in fixed mortgage rates presents a potential turning point for the property market, bringing opportunities for homebuyers, homeowners, and sellers alike.

What does the Base Rate decision mean for the property market?

For home buyers

While the Bank of England’s decision to hold the base rate at 5% means there is no immediate reduction in borrowing costs, the recent fall in swap rates has already started to impact mortgage deals. Buyers looking to secure a 5-year, fixed-rate mortgage can now find rates as low as 4.3%, offering more affordable borrowing options. Lower mortgage rates reduce monthly payments, improving affordability for many buyers and giving them more flexibility when it comes to choosing a property. First-time buyers who have been navigating high mortgage rates may now see this as an opportunity to enter the market with more favourable terms.

For home sellers

For sellers, the combination of stable interest rates and falling mortgage costs could encourage more buyers to enter the market. With 5-year, fixed-rate deals at their lowest point in two years, more prospective buyers may be in a position to make offers, which could lead to increased market activity. This rise in demand can help sellers secure quicker sales and potentially attract competitive offers. A stable base rate also signals confidence in the broader economy, further supporting consumer confidence and driving property transactions.

For homeowners

For homeowners, particularly those approaching the end of their fixed-rate mortgage deals, the drop in mortgage rates provides an opportunity to lock in better rates for their next deal. This could lead to lower monthly payments, giving homeowners some breathing room when it comes to their finances. Homeowners on variable-rate mortgages may not see an immediate change in their payments, but it’s still an excellent time to explore re-mortgaging options to take advantage of falling fixed-rate deals and potentially reduce long-term interest costs.

What’s next?

While the Bank of England has decided to hold the base rate at 5%, the recent decline in swap rates is a sign that market conditions are evolving. Falling mortgage rates suggest that banks are expecting lower borrowing costs in the near future, which could influence future base rate decisions.

In the meantime, the drop in mortgage rates reflects positive momentum for the housing market, potentially easing some of the pressure that has been building over the past year due to rising interest rates. Although the base rate remains high, the lower fixed-rate mortgage deals signal a more optimistic outlook for buyers, sellers, and homeowners alike.

Advice for buyers and sellers

Given the current economic environment, both buyers and sellers should stay informed and be prepared to act quickly to take advantage of favourable conditions. We recommend seeking independent, professional mortgage advice to find the best deals available, particularly as mortgage rates continue to fluctuate. Whether you’re buying, selling, or re-mortgaging, professional guidance can ensure that you make informed decisions and secure the best possible financial outcome based on your unique circumstances.