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Displaying items by tag: base rate

The Bank of England has cut interest rates by a quarter percentage point to 5%, marking the first reduction in over four years. This decision ends the joint-longest period of stable rates since the Bank gained independence in 1997. The nine-member Monetary Policy Committee (MPC) voted five to four in favour of the cut. Lower interest rates will impact many savings accounts and floating rate mortgages immediately, though fixed rate mortgages had already anticipated this change. The rate cut follows a drop in the consumer price index rate of inflation to 2%, the MPC’s target. However, the Bank's updated forecasts indicate that inflation will rise to around 2.75% by the year's end. Governor Andrew Bailey cautioned that while inflationary pressures have eased, rates should not be cut too quickly to maintain stable inflation and support economic growth. The forecasts will be reviewed after the new chancellor’s budget announcement in October.

Published in British Isles

HSBC has joined Barclays and NatWest in reducing mortgage rates after hints of a summer base rate cut by the Bank of England. HSBC’s new rates took effect on 26 June, with more lenders expected to follow. However, borrowers still face high costs, and average mortgage rates have been rising due to a lack of competition during the election campaign. A commentator notes that the recent rate increases are now being unwound in small steps. Fixed mortgage rates remain constant until the deal expires, after which borrowers must choose a new rate or default to a more expensive variable rate. Around 1.6 million borrowers have expiring fixed-rate deals this year. The Bank of England may cut rates at its next meeting on 1 August, influencing recent lender moves.

Published in British Isles