The base interest rate remains at 5.25% after the Bank of England’s Monetary Policy Committee voted 5-4 against an increase. Many commentators had expected another rise in the rate, but the surprise fall in inflation probably prompted a rethink.
Inflation fell slightly last month to 6.7% from 6.8% in July, prompting some analysts to predict that the Bank would steer away from a rate rise.
But there were divided opinions on whether the Bank would still go for a rise to ensure inflation was under control.
Last month the MPC decided by a spilt vote to raise rates in the face of rising inflation.
The base rate has been rising since the end of 2021, with last month being the 14th consecutive increase.
The impact on homeowners with mortgages has been severe, as rates have risen dramatically albeit with a levelling off recently.
Mortgage rates will now be watched closely to see if they fall in the next few months.
Nicholas Mendes, mortgage technical manager at John Charcol, says: “Yesterdays unexpected inflation 6.7% announcement in August eased some of the pressure on the Bank of England decision making on whether to continue increasing interest rates.
“Moments after yesterday’s inflation announcements market expectations of a rate rise began to plummet, from what was an 80% certainty of a further rate hike down to an equal split,” he says. “There has been a steady decline in swap rates in recent days, which has resulted in many lenders reducing rates on both residential and BTL products, which is welcomed news for mortgage holders.”
Newsflash: UK inflation slowed to an annual rate of 10.1% in January, according to the Office for National Statistics’ consumer prices index. That indicates prices across the economy did not rise as quickly as expected in January after a 10.5% reading in December. Economists had predicted a rate of 10.3%.
Key takeaways When looking for an agent, you'll want someone who can see all the best things about your home, just like you can You’ll also want someone with plenty of experience when it comes to marketing properties like yours Local agents can really help to sell a home because they’ll know an area inside out and can highlight all of its best bits to potential...
Online estate agent Purplebricks is up for sale after revealing it expects to lose between £15-£20m this year. It said the potential of the group may be better realised under an "alternative ownership structure". After being founded in 2012 the firm had dazzling early success but has seen its share price fall 98% from its heights. The company said it be...
We've decided against posting Christmas cards again this year, instead we will be supporting 'Crisis at Christmas'!This amazing charity helps the homeless. Our donation will help someone take their first steps out of homelessness.Wishing all our family, friends and clients a very Merry Christmas and a prosperous New Year.