The Bank of England (BoE) has voted to hold the base rate at 4%.
The announcement earlier today was in line with financial market expectations.
The steady-as-she-goes approach comes after new figures released yesterday showed inflation remains unchanged at 3.8% (above the Bank’s target of 2%).
The BoE is obviously keen to get on top of this sticky inflation, hence the decision to hold rates rather than drop them.
In a statement, it said: “The [Monetary Policy] Committee remains focused on squeezing out any existing or emerging persistent inflationary pressures, to return inflation sustainably to its 2% target in the medium term.”
In layman’s terms, that means the Bank thinks inflation is nearing its peak and hope it will be heading downwards soon.
Are more rate cuts on the cards?
The general mood among financial experts is that interest rates will continue to slide, albeit gradually, given all the economic challenges at play.
Deutsche Bank predicts we might see one more cut in December, but other analysts are more cautious.
The BoE could also be influenced by the Budget, due to be announced on November 26, and its potential impact on the economy.
What does all this mean for buyers or those remortgaging?
Even though interest rates aren’t decreasing as quickly as they were earlier this year, there’s a lot to be positive about.
From a borrower’s perspective, the mortgage landscape is much better than it was two years ago.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Fixed mortgage deals have been drifting gradually down for some time, with the average two-year fixed rate falling from 5.2% four months ago to less than 5% (Moneyfacts).”
For context, the average two-year deal was 6.85% back in August 2023.
That’s a significant drop, saving borrowers on an average mortgage thousands of pounds each year.
However, Coles added that rates are “not going anywhere fast”.
So if you’re looking to buy, but are waiting until rates drop further, it may not be worth delaying.
Rates are moving downwards, but slowly, so don’t put important life decisions on hold for something that you can’t control.
What happens next?
The BoE’s monetary policy committee meets to discuss interest rates again on November 6.
As we flagged earlier, Chancellor Rachel Reeves unveils her Budget at the end of November.
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