The base rate holds firm at 5.25%, which is good news for anyone on a tracker or standard variable rate mortgage.

The Bank of England has reviewed the base rate and chosen to keep it at the current level of 5.25%. The next review will occur on 14 December, and economists predict there won’t be any further rate rises this year.

The previous review in September also resulted in the rate being held for the first time in 18 months.

Before that, the Bank of England had been consistently increasing the base rate to combat inflation, which has been high.

From December 2021 to August 2023, the base rate has increased from 0.1% to 5.25%. Inflation peaked at 10.7% in November 2022 but now stands at 6.7%.

If the base rate had increased today, anyone on a tracker rate mortgage would have seen their monthly payments increase as these move in line with interest rates. Those on standard variable rate mortgages would have also paid more if their lenders chose to pass on the increase.

When will interest rates come down?

You may be wondering if mortgage interest rates will now start to come down. There has already been a slight reduction in rates, with lenders competing with each other for business.

Lenders now have little margin left to cut, but the property website Rightmove has predicted small rate reductions in reaction to the base rate being held.

Rightmove recently published average mortgage rates at the end of October, showing that a two-year fixed rate deal on a 95% mortgage stood at 6.26%. A two-year fixed rate on an 85% mortgage was at 6%, and for buyers with 40% deposits, the average two-year fixed rate deal stood at 5.37%.

However, the base rate is unlikely to come down anytime soon. The Bank of England has said it won’t reduce it until inflation reaches its ultimate target level of 2%, which it predicts will happen in or around the second quarter of 2025. Forecasts show that the base rate could be cut to around 3% by late 2025.

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