MPC Meeting Concludes with No Rate Hike but Words of Caution of Brexit
The most recent meeting of the Bank of England’s Monetary Policy Committee ended with the result which was most expected – a vote to maintain the current base rate at the record-low level of 0.5%. The vote was unanimous in fact, even though March posted a rise in inflation of 0.5%. The vote did not come without a tag of caution with members of the MPC stating the amount of economic activity will surely be in jeopardy following a Brexit vote in the coming weeks.
Mortgage lending including remortgages has been quite active in recent weeks and many experts within the housing market are urging borrowers to avoid becoming complacent with low interest rates. Even though rates have been low for years, that landscape could quickly change without the time to make a move or obtain a remortgage. This could end up costing thousands of pounds per month more than currently required to move home or remortgage.
The minutes from the MPC meeting laid out specifics of a Brexit vote, saying: “A vote to leave could have significant implications for asset prices, in particular the exchange rate.
“Ultimately, monetary policy would be set in order to meet the inflation target, while also ensuring that inflation expectations remained anchored. Whatever the outcome of the referendum, the MPC would use its tools to achieve its inflation remit.”
Jeremy Duncombe of Legal & General Mortgage Club commented on the result of the meeting, saying: “Today’s result reinforces earlier predictions that interest rates are likely to remain at record-low levels until next year. Whilst this is good news for many homeowners, it is vital that potential borrowers and those looking to remortgage do not get complacent about these rock-bottom rates.”
Duncombe added: “The temptation to delay looking at new mortgage deals should be ignored, as mortgage rates are not directly linked to base rates. Anyone who is thinking about re-mortgaging should therefore speak to a broker now to find out about the best product for their individual circumstances, before these deals disappear.”