It had been widely predicted the bank’s decision makers would vote against another cut today, particularly following yesterday’s high inflation data.
The Consumer Prices Index came it at 3.8% – the same as the previous month and much higher than the Bank of England’s 2% target.
Laith Khalaf, head of investment analysis at AJ Bell, said: “Inflation is still elevated and the Bank expects it to remain around current levels for the rest of the year. That means we should watch out for any big changes in the inflation number, as well as keeping an eye on the labour market to estimate where the Bank is likely to go.
“The interest rate committee felt there hasn’t been a huge shift in the economic data since they voted to cut rates in August, and on that front they are probably right. Markets now think it’s an outside chance we’ll get a rate cut by the end of this year.”
What it means for your mortgage?
Those who are on tracker mortgages are the most likely to feel the impacts of a rise or fall in interest rates, so maintaining the base rate will mean no change for their repayments.
For borrowers who are on fixed-rates, their interest rate is locked in and nothing changes anyway.
If you are currently looking for a new deal, and wondering whether to wait for further cuts before making your move, today’s decision may create an added level of complexity.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “Anyone coming off an old deal would be wise to lock in a new product rapidly rather than wait for borrowing conditions to ease further.
“Mortgage rates have fluctuated in recent weeks amid uncertainty around the future path of interest rate cuts.
“That volatility may continue, particularly in the run-up to the Budget, as policymakers will be keen to assess the impact of any new tax measures the Chancellor will roll out.”
Will the decision to hold interest rates impact your savings?
For savers the decision is a little more palatable. Last month’s interest rate cut saw many savings providers lower their variable rates so today’s decision to hold rates at 4% means further cuts are not as threatening as they were in August.
Haine explained it meant average savings rates may remain higher for longer.
“Savings rates have been easing downwards in recent months and with inflation creeping upwards, real, pre-tax returns are very much on the decline. That should not be a cause for apathy, however,” she said.
“Anyone with money idling in an old savings account paying a dismal rate should still shop around to secure the best deals while interest rates remain on the higher side.”
She suggests those who fear they may breach their Personal Savings Allowance (PSA) used an ISA to make sure they were protected from paying tax on their interest.
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
