Martin Lewis' MSE issues mortgage warning to homeowners after Bank of England decision

Pictured is Martin Lewis
-Credit: (Image: ITV)


Martin Lewis' Money Saving Expert team has issued a "fix now or wait" warning to mortgage holders following the Bank of England's interest rate decision. The BBC and ITV star's MSE team advised UK households on how to secure the lowest possible rate, suggesting that fixed rates could potentially drop further.

Aaron Strutt, from Trinity Financial, commented: "It seems likely that mortgage rates will continue to edge down for a while, especially with Bank of England base rate cuts expected [later this year]. The money markets have been pricing in future base rate reductions, which means they can offer cheaper deals."

David Hollingworth, from broker LandC Mortgages, also suggested more lenders might begin offering cheaper fixes "if swap rates don't move against them" (mortgages are indirectly linked to swap rates). Mr Hollingworth added: "The markets have continued to demonstrate more optimism about where the base rate is heading, so we could see the current trend of rate cuts continue."

He further noted: "So far we haven't seen any great push to equalise remortgage rates, but they have followed the purchase rates, plus five-year deals dipping below 4% will have pleased those looking for a new rate."

MSE clarified that five-year fixes are currently the cheapest option, Birmingham Live reports.

Mr Hollingworth concluded: "Over time, and assuming that base rate does follow the downward path that is expected, we should start to see a shift away from this unusual position where shorter term rates are undercut by longer term options."

The Bank of England has revised its inflation forecast, now expecting a rise to around 2.5% by the end of 2024, citing that "declines in energy prices last year fall out of the annual comparison". This outlook is more optimistic than the previous prediction made in August, where it was anticipated that inflation would reach 2.75% later this year.

In a recent decision, the Monetary Policy Committee (MPC) voted 8-1 to maintain the interest rate at 5%. Swati Dhingra was the sole member advocating for a reduction of 0.25 percentage points, which would bring the rate down to 4.75%.

The last MPC meeting in August had a closer outcome, with a 5-4 vote in favour of a cut. The next meeting of the MPC is scheduled for November 7.