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Today, the MPC met for the last time this year to discuss the Bank of England Base Rate. When will we see a Base Rate reduction, and what can we expect from mortgage rate pricing?

The Bank of England has decided to keep the Base Rate at 5.25% for the third consecutive meeting, setting landlords up for stability in the new year.

Typically, economists expect that, once the Base Rate has peaked, we have a nine-month period where the Bank of England will watch economic activity closely to ensure that measures to curb inflation have been successful. As such, we anticipate the first Base Rate decrease as early as June/July next year.

However, it’s worth noting that several significant political factors could delay this decrease. Namely, the ongoing conflicts in Israel and Gaza, Russia and Ukraine, and the UK general election that could take place either in May or the Autumn. Whilst the Israeli and Palestinian conflict has yet to have any real impact on the UK money markets, there is understandably an element of uncertainty for how this could affect economic stability in the future. Furthermore, the money markets’ confidence in the UK political parties will determine what happens to the Base Rate.


What does this mean for fixed mortgage rate pricing?

Despite this political uncertainty, money markets clearly show confidence in the current economic landscape. SWAP rates have come down and now sit around 4%, with 5-year SWAPs dropping just below 3.99% on Monday this week. 

Some mortgage lenders have slightly decreased their mortgage product pricing as a result. However, this is in an attempt to attract new business. While lender profit margins remain tight, we expect many will consider reducing their fee costs first rather than the interest rate. This will still make many mortgage products more accessible to landlords, as high arrangement fees have stretched affordability for many borrowers.

If you’re approaching the end of your fixed-rate mortgage term, there are plenty of competitive products on the market. As we enter the Christmas period, we have seen some leading lenders review their product offerings to become more competitive with, for example, cashback rates to attract new customers. Some of these are semi-exclusive, meaning only certain brokerages, like us, can offer these products. As such, it’s so important to work with an expert broker to review your mortgage options, as it’s the best way to ensure you access the right deal for you.

Speak to an expert

To see what types of rates you can access and to receive invaluable advice for your property investment plans, get in touch with one of our expert brokers at 0345 345 6788 or submit an enquiry here.

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