By Simon Gammon, Managing Partner
The Bank of England (BoE) opted to hold the base rate at 5.25% on Thursday, but two of the nine members of the Monetary Policy Committee (MPC) now believe it’s time to begin cutting.
It’s been a volatile few months for those of us seeking to purchase or remortgage a home.
Euphoria set in around the turn of the year when it appeared inflation was nearly beaten. Mortgage rates fell quickly as lenders battled for market share.
The narrative turned again in March following a string of hot inflation data points, particularly from the US. Mortgage rates began rising again: in the past fortnight, every major lender has raised rates for both new and existing customers.
The BoE opted to hold the base rate at 5.25% earlier today, but the MPC meeting minutes published alongside the decision should help bring some stability to mortgage rates. Two of the nine MPC members now believe it is time to begin cutting, and the BoE’s inflation forecasts look a little more benign than the previous round.
The report will also reinforce the view among investors that the first rate cut will arrive this summer. At a press conference following the decision, Bank of England Governor Andrew Bailey acknowledged expectations that the MPC would vote to cut in June, though he said a lot will depend on how the inflation data develops over the next four weeks.
That may well come to pass, but in my nearly two decades as Managing Partner of Knight Frank Finance, I can’t remember another period in which conditions have shifted so regularly and rapidly in such short periods of time. Without speaking to a mortgage broker covering the entire market, it’s impossible for borrowers to keep track of which lenders have the best deals available in each moment.
My advice during times like this is to lock in the best deal you can at the earliest opportunity. Most deals are valid for six months and can be renegotiated should conditions improve.
Indeed, we do expect conditions to improve as the year progresses. Investors expect a second rate cut before the year is out, which will support activity and underpin a modest uptick in property values.
If you are considering purchasing or remortgaging a home, please get in touch with one of our experienced brokers. We have relationships with over 200 lenders and we’d be happy to walk you through your options.