Base Rate holds firm as inflation falls

Published  21 March 2024
   3 min read

Commenting on today’s decision by the Bank of England to hold the Base Rate at 5.25%, Sarah Pennells, Consumer Finance Specialist at Royal London said:

"Anyone expecting an immediate reaction from the Bank of England to falling inflation will be disappointed to see that rates have been held for the fifth consecutive time.

"While an immediate fall in the Base Rate was always unlikely, it could be the signal that consumers will see a rate fall in the coming months.

"The fact that rates haven’t fallen could make it harder for those homeowners who are looking to remortgage as well as those buying a property. There are over a million homeowners whose fixed rate deal will end this year; with the vast majority on interest rates below 2.5%. Royal London’s cost of living research shows that people were paying over £300 more in housing costs this February compared to a year ago. Fixed rate deals have been rising again in recent weeks but are expected to fall again later this year. Whichever option they choose, it’s likely to be cheaper, possibly much cheaper, than their mortgage lender’s standard variable rate (SVR). This is where advice from an impartial mortgage adviser can be invaluable. They can weigh up the pros and cons of opting for a shorter fixed rate, or a tracker deal, against committing to a longer fix.

"Although savings rates have been getting higher, with best buy easy access accounts paying over 5%, they have not kept pace with the rises in the Bank of England base rate. It's vital that savers shop around to see whether there is a better rate available for them, especially if they have a sizeable emergency savings pot."

Sarah’s tips:

  • If you’re nearing the end of your current fixed deal, you can start to look at your options and secure a new deal with a lender around six months in advance of the mortgage start date. Taking advice from an impartial mortgage adviser can be invaluable. The cheapest deal isn’t always the cheapest interest rate, and they can advise you on the best option.
  • If you’re already struggling with your current mortgage repayments, get in touch with your lender if you’re worried about being able to afford your mortgage. Contacting your mortgage lender in this way won’t have any impact on your credit file.
  • It is much better to have the conversation with your lender early so they can look at available support options with you before you find yourself with any mortgage arrears. Contacting them before you miss payments, or as soon as you’re falling short on payments, means there may be more options available to you to help make your payments affordable.
  • Mortgage lenders that have signed up to the Mortgage Charter have said customers who are up to date with their mortgage payments will be able to switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments. The lender won’t need to carry out an affordability check and it won’t affect the customer’s credit score. However, customers who want to go back to their original mortgage term will have to contact their lender within the six-month period. 
  • If you’re struggling with other household bills or you’ve received letters mentioning repossession, contact a free-to-use debt advice charity, such as StepChange, National Debtline or Citizens Advice, or the financial poverty charity, Turn2us, straight away.
  • Savers should make sure that they’re making the most of their tax-free allowance and reviewing the rates offered on existing savings accounts as there can be more attractive options out there as providers tend to offer their highest interest rates on new customer accounts.

For further information please contact:

Nicki Parry, PR Manager

About Royal London

Royal London is the largest mutual life, pensions and investment company in the UK, and in the top 25 mutuals globally, with assets under management of £162 billion, 8.6 million policies in force and over 4,200 employees. Figures quoted are as at 31 December 2023. Learn more at