How The Bank Of England's Base Rate Cut Impacts UK Mortgage Rates

How the Bank of England's Base Rate Cut Impacts UK Mortgage Rates

The recent reduction in the Bank of England’s base rate was expected to ease borrowing costs for UK mortgage holders. However, in a surprising twist, some lenders have increased their mortgage rates despite the cut. For many borrowers, this raises questions about why rates are rising when the central bank is signalling monetary easing.

Why Are Mortgage Rates Rising?

Lender Decisions Diverge from Base Rate Trends
Traditionally, a reduction in the base rate would lead to lower mortgage rates. But in the current climate, a number of lenders have opted to raise their rates. These increases have impacted both new borrowers and those seeking product transfers, creating additional cost pressures for homeowners.

Market and Inflationary Pressures
Several factors are contributing to this trend:

• Reduced Product Availability: A significant number of mortgage products have been withdrawn from the market, limiting borrower choice and increasing competition for available deals.

• Persistent Inflation: Despite the base rate cut, inflation remains a concern—particularly due to continued rises in energy costs and service sector pricing. These inflationary pressures influence lender strategies, leading to more conservative pricing.

Policymakers have indicated that inflation remains a key risk, and this has led to cautious behaviour across the mortgage market.

What Can Borrowers Do Now?

Act Promptly to Secure a Deal
In an environment of rapidly changing mortgage rates, borrowers may benefit from locking in a fixed-rate deal early. Securing a mortgage product before further changes occur could help protect against future rate increases and support financial planning.

Seek Expert Advice
Given the complex market conditions, consulting with a professional mortgage broker can provide clarity. A broker can help assess your circumstances, review available products, and support you in selecting the most appropriate mortgage deal for your financial needs.

Conclusion: Staying Ahead in a Shifting Market

The recent base rate cut has not yet translated into lower mortgage costs for many borrowers. Instead, market conditions and inflation concerns are driving some lenders to raise rates. In this environment, it’s essential for borrowers to stay informed and seek professional guidance.

Mortgage One offers expert support to help you navigate today’s mortgage market—whether you’re remortgaging or purchasing a new home. Contact us today for tailored advice and assistance in securing a mortgage that suits your needs.