May 8

BoE Under Pressure for Interest Rate Cut


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Mortgage costs are steadily increasing, prompting renewed calls for the Bank of England and Governor Andrew Bailey to consider reducing the base rate during their upcoming announcement on Thursday. There’s mounting pressure on the Bank of England as it approaches its latest decision announcement, with expectations that interest rates may need adjustment. This escalation in mortgage expenses coincides with the Bank’s Monetary Policy Committee adhering to its stance of awaiting a decline in inflation before making any policy changes.

Santander, Natwest, and Nationwide have all recently implemented rate hikes, further exacerbating the burden on mortgage holders. These increases in mortgage costs underscore the urgency for potential adjustments to the base rate. Despite calls for intervention, the Bank of England’s Monetary Policy Committee remains cautious, prioritizing a wait-and-see approach in anticipation of inflation moderating.

As the Bank of England prepares for its decision on interest rates, the continuous rise in mortgage costs amplifies the pressure for policy adjustments. With major lenders such as Santander, Natwest, and Nationwide increasing rates in the past week, the impact on borrowers becomes increasingly pronounced. This ongoing trend heightens expectations for proactive measures from the Bank of England to alleviate the strain on mortgage holders and support economic stability.



In March, the Bank maintained the base interest rate at 5.25%, with an almost unanimous decision despite a drop in inflation to 3.4%, later reaching 3.2%. Governor Andrew Bailey stated that it wasn’t the appropriate time to reduce interest rates, citing “further encouraging signs” of declining inflation. Bailey emphasized the importance of ensuring that inflation not only reaches but also remains at the government’s target of 2%.



According to the latest tracker data from Rightmove, mortgage rates are on the rise. The average 5-year fixed rate stands at 4.97%, while the two-year fixed rate is at 5.38%.

Matt Smith, Rightmove’s Head of Product (Mortgages), emphasizes the significance of the upcoming Bank of England meeting. He suggests that the meeting will play a crucial role in setting the tone for mortgage rates as we head into the summer.


“There is still a lot of uncertainty around when we might see the first interest rate cut.”


“There’s been notable unease in the global economy recently, leading to ongoing uncertainty regarding the timing of the first interest rate cut. This uncertainty, coupled with other factors, has resulted in an increase in average mortgage rates,” he explains.

“However, despite these increases, it doesn’t seem like we’re witnessing the same level of rate spikes as we did this time last year.”



– The average 5-year fixed mortgage has risen to 4.97% from 4.48% a year ago.

– The average 2-year fixed mortgage now stands at 5.38%, up from 4.78%.

– For an 85% Loan-to-Value (LTV) 5-year fixed mortgage, the average rate has climbed to 4.90% from 4.44%.

– Similarly, for a 60% LTV 5-year fixed mortgage, the average rate has increased to 4.50% from 4.17%.


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BoE Under Pressure for Interest Rate Cut, MORTGAGE RATES UP

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