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Landlords have longer to wait for mortgage rate cuts

Andrew Bailey Bank of England

The Bank of England has left UK interest rates on hold at 5.25% for the sixth time in a row, delaying any reduction in mortgage rates.

Despite UK inflation slowing to 3.2% in March, governor Andrew Bailey says he needs to see more evidence that price rises have slowed further before taking action.

The Bank expects inflation to fall close to its 2% target in the next couple of months while Bailey is “optimistic that things are moving in the right direction”, as he held rates at the 16-year high. Instead, the first interest cut may not happen until later in the summer, although could come as early as next month.

Eventual cut

While many estate agents are still confident of an eventual cut, Lucian Cook, head of residential research at Savills, believes the news means there won’t be a further meaningful fall in mortgage rates this year, despite an improved overall outlook, with the potential for short term fluctuations in the cost of debt and house prices.

However, the highly competitive nature of the mortgage market has meant that mortgage costs have already nudged down this year, and have been much less volatile, says Cook. “Combined with an improved outlook for economic growth, and increased buyer confidence, we can now expect modest house price growth this year.”

Too unpredictable

Henry Knight, MD of mortgage broker Springtide Capital, says a cut in rates was highly unlikely as the current market remains too unpredictable. He adds: “Although inflation levels have dropped compared to last year, the Bank still has some way to go to achieve the 2% target rate. Whilst this isn’t the news that house hunters had hoped for, we are optimistic that a rate cut is still on the cards later this year.”


Mortgage rates
Interest rates