Positive signs ahead: Should dentists wait or act on mortgage deals now?

As anticipated, the Bank of England has maintained its borrowing costs at a 16-year peak of 5.25%, marking the sixth instance since last August that the central Bank Rate has remained unchanged. The decision from the Monetary Policy Committee (MPC) meeting on 9 May – which saw a 7-2 vote to keep the Bank Rate stable – mirrors the recent stance of the US Federal Reserve, which also opted to maintain borrowing costs.

Like its counterparts, the Federal Reserve and the European Central Bank, the Bank of England is mandated by government to achieve a 2% inflation rate over the medium to long term. Following a surge in inflation during 2022 and much of 2023, the Bank of England implemented 14 consecutive rate hikes in its most vigorous monetary tightening since the 1980s. This action has led to a reduction in the UK’s inflation rate from an 11.1% high in October 2022 to 3.2% by March 2024, with April’s data due on 22 May. Bank officials are hopeful that the upcoming inflation report will show further decreases, potentially setting the stage for a reduction in borrowing costs as soon as June.

This news is promising, suggesting that the era of soaring interest rates may soon come to an end. However, first-time buyers and those considering remortgaging should carefully weigh their options and not necessarily wait for rates to drop.

While there are positive signs indicating a potential decrease in interest rates, mortgage rates do not always follow market predictions. Lenders may adjust their variable rate products at their discretion, regardless of central bank policies. This means that waiting for a potential decrease in the Bank Rate might not result in the lower mortgage rates you expect.

For those coming off fixed-rate deals, moving onto a lender’s standard variable rate (SVR) can be significantly more expensive. Delaying a remortgage decision in hopes of better deals in the future could result in higher monthly repayments in the short term. The cost of waiting for a marginally better rate might outweigh the potential savings.

Despite the high Bank Rate, there are still competitive mortgage deals available, especially for those prepared to shop around. Mortgage brokers can offer insights into the best deals on the market and help navigate the various options available. By acting now, you can secure a good rate and avoid the uncertainties of future market conditions.

While the prospects of falling interest rates are encouraging, it’s important to act based on your current financial situation and needs rather than waiting for market conditions to change. Consult with a mortgage advisers to explore your options and secure the best possible deal for your circumstances. The potential cost of delay can be expensive, especially for those nearing the end of their fixed-rate deals. Take advantage of the good deals available now and make an informed decision that aligns with your financial goals.

The above is for information only and does not constitute individual financial advice.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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