Bank of England Holds Bank Rate at 5.25% in May: What it Means for Mortgages
Are you in the market for a new mortgage or looking to remortgage your current home? The recent decision by the Bank of England to hold its Bank Rate at 5.25% in May has significant implications for mortgage rates. In this blog post, we’ll explore how the Bank Rate affects mortgage costs, the current average cost of popular mortgage deals, and what you need to know before starting a remortgage.
The Bank Rate has remained unchanged for the sixth consecutive time since it rose to its current level in August last year. This stability is attributed to cooling inflation, with the rate dropping from 3.2% in March to 2.3% in April. Experts predict that this downward trend in inflation may prompt the Bank of England to cut its Bank Rate in the near future.
So, how does the Bank Rate affect mortgages? For over a million homeowners on variable rate deals, such as trackers, any adjustment to the Bank Rate will immediately impact their monthly payments. On the other hand, borrowers on fixed-rate deals are shielded from these changes until their deal expires.
Currently, the average cost of a two-year fixed rate mortgage stands at 5.18%, with three- and five-year deals averaging at 5.04% and 5% respectively. The best deals in the market are priced even lower, with two- and three-year fixed rate deals at 4.17% and 4.49% respectively.
If you’re considering a remortgage, it’s essential to understand the factors that influence mortgage costs. Mortgage deals offering the lowest rates often come with fees attached, which can be paid upfront or added to the loan. Additionally, having a higher deposit amount and a clean credit history can increase your chances of securing a better mortgage deal.
When it comes to house prices, recent data shows a relatively flat market, with average property values experiencing minimal growth. As the interest rate cycle reaches its peak, signs for the housing market have been largely positive.
If you’re ready to start a remortgage, keep in mind that mortgage offers are typically valid for six months, allowing you to lock in a rate without any cost or commitment. By understanding how the Bank Rate influences mortgage costs and staying informed about current market trends, you can make informed decisions when it comes to your mortgage.
For personalized mortgage advice and assistance in finding the right mortgage deal for you, consider reaching out to Better.co.uk, a 5-star Trustpilot rated online mortgage adviser. Remember, your home may be repossessed if you do not keep up with mortgage repayments.
Stay informed, stay proactive, and make the most of the current mortgage market trends to secure the best deal for your home.