The long-awaited cut to the standard base rate has happened. The Bank of England’s Monetary Policy Committee (MPC) met on the first day of August to do what has not been done since March 2020, they cut the rate. The minimal rate cut of 0.25% has moved the base rate down to 5.0% from the 5.25% that has been working to tame inflation since August 2023. The last two meetings, in May and June, without a scheduled meeting in July, resulted in two members voting for the rate cut. The August meeting barely had the majority vote of 5-4 to move the rate downward, but it was enough. 

Not in years has there been as much attention on the decision of the Bank of England’s Monetary Policy Committee (MPC) as there is now. The committee will be meeting tomorrow and if they vote to lower the standard base interest rate it is a sign the economy is strongly moving toward recovery. It would be the first time a rate cut has occurred since March 2020. It was then the MPC voted to cut the rate to almost zero at 0.1% in response to the global pandemic’s impact on the UK economy. It remained at the historical low level until December 2021 when the MPC voted to increase the base rate by more than double to 0.25%. Every meeting of the MPC afterwards through August 2023 resulted in a rate hike when it rose to 5.25%. Since then, borrowers have faced higher interest rates as the Bank’s rate is at a sixteen-year high.

There is growing optimism in the economy and housing market and that has helped to bring more properties to the housing market. In turn, because there are more homes for sale and because lenders have been dropping their mortgage interest rates, the forecast is for house prices to increase as buyer demand grows. There is not a buying boost expected like the major one that came about due to the pandemic lifestyle changes, but according to Zoopla, a 2% increase will occur towards the end of the year. This is good news for the economy, and for homeowners as their property values could increase and influence their loan to value (LTV) ratio when seeking a remortgage and bring about better interest rate offers.

Summer is well underway and yet there has still not been a standard base interest rate cut by the Bank of England’s Monetary Policy Committee (MPC). Forecasts were once calling for a cut early in the year, then it moved to late spring, now it is thought to be either the end of summer on 1 August or in early autumn in September. However, lenders are not waiting on the MPC, but are instead cutting their own lending rates. As the 2024 Summer Olympics take place in Paris and we are all glued to the coverage, it is important to take a few minutes to shop for a remortgage and achieve our own Olympic sized opportunities to save money.

Homeowners are likely to find substantial savings if they shop for a remortgage now. Waiting on the decision of the Bank of England’s Monetary Policy Committee (MPC) to cut the standard base interest rate is not necessary to find lower interest rates. Lenders have been confident that a rate cut is nearing and have lowered their interest rate offers over the last few weeks. Recently, Nationwide lowered rates below 4% on mortgages while the Bank’s base rate remains at 5.25%. Remortgage rates are not as low but are nearing the same threshold.

Homeowners most likely lack interest in the housing market once they complete their sale. However, how the market is fairing and what is happening in their surrounding area is important. If the value of properties is rising or declining has an impact on their financial opportunities and not just if and when they are willing to sell. This is especially true for when homeowners remortgage and millions will be doing so over the next twelve months.