Interest rates were left unchanged again in March, but the Bank of England hinted that increases could be on the horizon
The Bank’s Monetary Policy Committee (MPC), which decides whether rates should move, voted by seven to two to keep the base rate at 0.50%. Rates haven’t increased since November last year, when the MPC voted to raise the base rate from 0.25% to 0.50%. The rate was cut to 0.25% in August 2016 following the vote for Brexit.
Despite rates remaining on hold again this month, the Committee said that “ongoing tightening” would be required to help bring inflation, or the cost of living, down. Even though inflation fell from 3% to 2.7% last month, it is still well above the government’s 2% target.
Commentators claim we could see two quarter per cent increases this year, possibly in May and then again in November. MPC members have agreed that any rises are likely to be at “a gradual pace and to a limited extent”.
Make the most of current low rates
If you’ve seen a competitive mortgage deal you like the look of, don’t hang around. Recent weeks have seen several lenders raise their mortgage rates ahead of a potential rise, and other lenders are likely to follow suit.
Many people are busy locking into fixed rate deals to protect them from future rate increases. Having a fixed rate mortgage can provide valuable budgeting certainty as your monthly payments won’t change even if rates do go up.
If you’re already tied into a mortgage deal, but it is due to end in the next few months, bear in mind that you may still be able secure another deal now and arrange for it to begin as soon as your existing deal ends.