Bank of England Abandons Rate Cut Hopes Amid Inflation Concerns

The Bank of England's Monetary Policy Committee (MPC) is expected to hold its base rate at 3.75% on Thursday, according to Equifax UK, which warns that interest rate reductions are no longer a possibility.

The MPC voted 7-2 in favor of maintaining the current rate at its June meeting, with two members advocating for a 0.25 percentage point increase to 4%. The shift reflects growing concerns about inflation and global energy prices following the conflict in the Middle East.

Equifax's Paul Heywood said borrowers on variable mortgage rates should not expect relief from rising monthly payments this year, citing the risk of rate increases adding uncertainty for households. He noted that one in 10 new UK mortgages are now being arranged with terms of 35 years or longer, as borrowers opt for longer repayment periods to reduce short-term outgoings.

Ben Thompson, director of home moving strategy at Mortgage Advice Bureau, cautioned against passivity and advised exploring rate options sooner rather than waiting for a better deal. He emphasized that mortgage rates do not stay predictable for long in today's geopolitical climate.