Update From Your Friendly Broker - BOE Base Rate
Your Friendly Broker – Base Rate Update
Hello again Friends, it feels like I’m bombarding you at the moment, I’m sorry for that, but it’s a sign of the fast-moving times we are living in I suppose.
ANOTHER BASE RATE REDUCTION!!
I don’t always come with good news, (especially after that Budget!), but today is NOT one of those days…The Bank of England have decided to drop the base rate to 4.75% (by a vote of 8-1).
This now represents the 2nd drop in base rate in 3 months and is the lowest the rate has been since June 2023.
It’s not all gumdrops and rainbows however, as there are many challenges still ahead. Especially now that we need to factor in a new Trump Administration in the US and how that could affect Global Markets, Inflation, the war in Ukraine etc etc etc…..
All the above factors have led most commentators to believe that rates are not going to drop as fast as first thought during 2025. But let’s not let that get in the way of what is good news today, and hopefully a direction of travel, no matter the pace.
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What does this mean for mortgages?
Whilst I expect the “Big Boys” (your Barclays, Santander, Nationwide, Halifax, HSBC etc) to react and drop rates immediately, this needs to be put into the context of many Highstreet lenders having just increased rates slightly post budget, so there is a bot of a rate game being played.
With regard to specialist lenders, those that would lend to LTD co, HMO, Multi Let etc. I don’t expect them to be as nimble as would be surprised if we see an immediate drop in the rates they offer. The main reason for this, as I have said before is that many of the specialist lenders, borrow the money they lend in tranches at a fixed cost, so until they use up that tranche of funding and have a new tranche (at a lower rate), it is hard for them to pass on any saving.
But overall, this is great news, the economy remains under control (if not a little stagnant), and despite the budget the Bank Of England feels happy enough to offer this drop in rate. That shows a level of confidence and in my experience markets are all about confidence.
Good luck out there
Nick.