Yesterday’s split Bank of England vote suggests that competitive mortgage deals currently on the market are likely to remain available in the near term, with the potential for borrowing costs to fall further if interest rates are cut later this year.
The Bank held the base rate at 3.75%, as widely expected, following a 5–4 vote by the Monetary Policy Committee.
The base rate was reduced to 3.75% in December after being held at 4% in September. Inflation rose to 3.4% in December from 3.2% in November, according to the Office for National Statistics.
Economists are forecasting between one and three further rate cuts this year, which could see the base rate fall to between 3% and 3.5%, with the first of those potential reductions coming as soon as 19 March, when the MPC meets again.
Lorna Hopes, mortgage specialist at the chartered financial advisers Smith & Pinching, commented: “The fact that four members of the committee voted for an immediate rate cut suggests that a cut could be coming sooner than thought.
“If inflation starts to ease as predicted, that could persuade a majority of the Bank’s ratesetters to cut the base rate the next time they meet in mid March.
“For now, the Bank’s decision means two things. No change for anyone who has got a variable rate mortgage, and the possibility that some of the amazing fixed rate deals launched in January could stick around.
“Lenders often start the New Year by trimming their rates and trying to steal a march on their competitors, and this January saw a particularly fierce price war.
“That competition could now continue, and this is great news for existing homeowners who are due to remortgage in coming months, and for renters who’ve decided that 2026 is the year to take the plunge and buy their first home.
“Many borrowers can now get a fixed rate of well under 4%, and there are some eye-catching deals available to some remortgagers and buyers with a big deposit. Today’s decision means those deals might stick around a bit longer, but if you’re due to remortgage in the coming months it’s worth shopping around and talking to a broker now.”