Bank of England holds interest rates at 5.25% again – what it means for your money

The Monetary Policy Committee voted by a majority of 7–2 to keep rates unchanged, it announced at noon, as almost all economists had predicted.to two per cent in May, reaching the Bank of England’s target for the first time since July 2021.

The report said that for these members “the upside news in services price inflation relative to the May Report did not alter significantly the disinflationary trajectory that the economy was on.”Economists believe interest rates will most likely fall in August. However, they acknowledge that this could change dependent on whether inflation increases again.

“We continue to look for a cut in August but realised upside surprises in inflation skew the risks to the MPC initiating rate cuts in September and fewer cuts over 2024 as a whole.” Some 81 per cent of people are on fixed-rate mortgages, where the interest rate is locked for a set period of time so if you’re on this type of loan, your repayments will not change based on Thursday’s interest rate announcement.

Broadly speaking, as interest rates are expected to come down, mortgage rates are likely to come down too, though the picture for this can change. “The first step in preparing for the end of your fixed mortgage rate is to review your current mortgage terms, specifically the loan balance. Knowing how much you owe at the end of your term is crucial for comparing future refinancing options and understanding the current interest rates available.”

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