Bank of England Holds Base Rate as Market Expectations of Hikes Rise
The Bank of England has decided to keep its base rate unchanged at 3.75%, despite financial market expectations of rate hikes in the coming months.
According to SPF Private Clients chief executive Mark Harris, borrowers still have to contend with an upwards trajectory in mortgage pricing, with several big lenders increasing rates on their two- and five-year fixes.
The central bank's decision does not directly affect mortgage rates, but it can impact their direction. Lenders price their products against the Sterling Overnight Index Average (SONIA) and gilt yields, both of which react to rate decisions and forward guidance.
Fleet Mortgages chief commercial officer Steve Cox cautioned that the hold should not be interpreted as meaning product rates will stand still for the buy-to-let mortgage market. He noted that lenders have already had to respond to higher swap rates and funding costs over recent weeks.