Bank of England holds interest rates

The Bank of England has held interest rates at 4.5% as expected to help reduce inflation or even price rises.

This is a major blow for those who have an 8% mortgage as there is no sign in sight of when costs will ease.

The Bank’s governor Andrew Bailey has insisted that the Monetary Policy Committee (MPC) makes a “gradual and careful approach” to reducing the base rate amid global economic uncertainty.

Paul Heywood, chief data and analytics officer at credit agency Equifax UK said: “Bank of England policymakers have been warning on inflation and lingering uncertainty, so further rate-cutting relief for homeowners looks to be an unlikely outcome from this month’s meeting.”

“Looking further ahead, we continue to expect 100bps of BoE cuts for a terminal rate of 3.5% by early 2026,” Nomura Bank analysts George Buckley and Andrzej Szczepaniak wrote.

Alastair Douglas, TotallyMoney CEO said: “If you’re waiting for a rate cut to remortgage, then you might be better off locking in a new deal before your bank puts you onto their Standard Variable Rate.

“The is currently 6.75 per cent but you could find yourself paying upwards of eight per cent. Banks are already likely to have already factored future rate cuts into their pricing, so we might not see any big changes if and when the MPC makes its next move.”

Thomas Pugh of RSM UK said “the next rate cut will probably come in May” after average regular pay rose by 5.9% in the three months to January, its joint highest pace since April last year.

“We continue to expect a slight weakening this year as firms press pause on hiring in the wake of the Budget, but there are no signs of surging unemployment,” he added.

“However, pay growth remains far too strong for the Monetary Policy Committee (MPC) to relax.”