The decision by the Bank of England came as a surprise to many analysts who were expecting a 15th consecutive increase. However, the move brought immediate relief to 1.4 million people on tracker and standard variable rate (SVR) deals who have been seeing regular increases in their monthly repayments. Despite this relief, compared with December 2021, those on a tracker mortgage are paying £540 (£1 = $1.2253) more a month, or £299 more a month on an SVR.
The rate hold also sparked reactions from major lenders. NatWest cut its fixed residential and buy-to-let deals by 0.31%. Nationwide followed suit, offering five-and-10-year deals starting at 4.94%. TSB and Virgin Money also reduced some of their deals with rates starting from 5.09% and 4.97%, respectively. Yorkshire Building Society dropped its five-year fixed rate deal to 4.99%.
Despite these reductions, the average two-year fixed rate residential mortgage remains at 6.56%, a slight drop from 6.58% the previous day. The average five-year fixed residential mortgage rate is now 6.06%, down from an average rate of 6.07%.
The decision by the Bank of England was influenced by a shock fall in inflation to 6.7% announced on Wednesday, signaling an end to the need for more aggressive action. However, officials left the door open to further rises in the future, promising to “take the decisions necessary” to return inflation to a level of 2%.
Andrew Bailey, governor of the Bank of England, stated that while inflation has fallen significantly in recent months and is expected to continue doing so, there is no room for complacency. Economists and mortgage brokers have predicted that any further increase in rates is diminishing fast and are likely already at their peak.
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Source: Economy - investing.com
