Property Market Latest | Interest Rates Held at 5.25%

10th May 2024

The Bank of England (BoE) has announced it will hold the Base Rate at a 16-year high of 5.25%. The Base Rate has been held since August 2023, following 14 consecutive rises. 

There was a somewhat unexpected rise in inflation announced in January (+0.1%), which resulted in swap rates – the underlying cost of mortgages – edging up. And this led to some lenders reversing some of their rate cuts. That said, we haven’t seen the spike in rates like we saw during the same period in 2023.

The average 5-year fixed rate is down from 6.08% in July 2023, to 5.02% this week, and the average 2-year fixed rate is down from 6.61% in July, to 5.41%.

Financial markets are predicting that the Base Rate is at its peak. and that interest rates will remain flat into 2024, before gradually starting to come down. This should then start to be reflected in fixed-rate mortgage products with reduced rates on offer from mortgage lenders.

But it’s difficult to predict when we could start to see more sizeable drops in mortgage rates, their shift is highly dependent on many factors including the state of inflation, falling swap rates, and no unexpected shocks to the economy. 

Read more at https://www.rightmove.co.uk/news/articles/property-news/interest-rates-update/