Mortgage Market News

The Bank of England maintains base rate at 0.5%

The Bank of England announced this month that it would not be cutting the base rate1: which is yet unchanged from its historic low of 0.5% since March 2009.2

This comes despite the speculation by many that it would be cut after Mark Carney, the Governor of the Bank of England, stated that the bank would be implementing monetary policy stimulus over the summer. His aim; to ward off a recession brought about by the economic shock from the vote to leave the EU last month.3

Last week saw the announcement that the Financial Policy Committee will reduce capital liquidity buffers. This means lenders will now be able to make greater use of the reserves they have built up since the financial crisis. This will improve their flexibility to continue their supply of lending to UK households and businesses.4The aim is to protect the UK economy from damaging instability following the vote to leave the EU.5

With Mark Carney predicting a far more risk-averse environment to emerge post referendum, lenders will become more cautious and begin passing on any increase in costs to borrowers.

A cut in the base rate may have taken some of the pressure off UK households and businesses when it comes to getting credit.6Lenders may have been more inclined to lend their money increasing the money supply to the market.7

However, a cut in the base rate may still be made over the coming months. Whether these measures will be enough, or if they send out a message that is overly negative about the state of the UK economy is still up for debate.8

To see the Bank of England’s full assessment of the post-Brexit situation we must wait for their report to be published in August.9

Overall this month has brought both positive and negative news for mortgage lending, so it is understandable that many are holding off on borrowing decisions while waiting for the dust to settle, even though the base rate has remained unchanged.

If you are coming up to the end of your initial mortgage period and are thinking about remortgaging, or are purchasing a new property and would like to find the best rates, please call us on 020 7519 4985 or send us an email to speak to one of our experienced Mortgage Managers.

  1. http://www.bankofengland.co.uk/Pages/home.aspx
  2. http://www.bankofengland.co.uk/publications/Pages/fsr/2016/jul.aspx
  3. http://www.bankofengland.co.uk/publications/Pages/fsr/2016/jul.aspx
  4. http://www.bankofengland.co.uk/publications/Pages/fsr/2016/jul.aspx
  5. http://www.bankofengland.co.uk/publications/Pages/fsr/2016/jul.aspx
  6. http://www.bankofengland.co.uk/publications/Pages/fsr/2016/jul.aspx
  7. http://www.telegraph.co.uk/business/0/why-is-the-bank-of-england-expected-to-cut-interest-rates-and-wh/
  8. https://www.theguardian.com/business/2016/jul/10/bank-of-england-considers-interest-rate-cut-to-tackle-brexit-crisis
  9. https://www.theguardian.com/business/2016/jul/10/bank-of-england-considers-interest-rate-cut-to-tackle-brexit-crisis

Return to the Latest Market News

Our insights


We are the UK’s leading specialist in delivering innovative and bespoke financing solutions to global clients.

Reviews


Specialists in creating innovative and bespoke funding solutions.

Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt. You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing any other debts against your home.  

largemortgageloans.com is a trading name of Largemortgageloans.com Ltd, Aegon House, Ground Floor Suite, 13 Lanark Square, London, E14 9QD authorised and regulated by the Financial Conduct Authority (FCA). Our FCA registration number is 302228 and can be viewed by visiting the FCA website: www.fca.org.uk.  The FCA does not regulate tax advice or some aspects of commercial, buy to let, overseas mortgages, bridging finance, finance and asset lending.  

Largemortgageloans.com Limited is registered with the Guernsey Financial Services Commission, reference number: 2269418, as a Non-Regulated Financial Services Business.  

Largemortgageloans.com Ltd Registered in England and Wales No: 5070990 Registered Address: As above. The guidance and advice contained within the website are subject to the UK regulatory regime and is primarily targeted at UK customers. Calls may be recorded for training and monitoring.