In November, the Bank of England opted to maintain the Bank Rate at 5.25% for the second consecutive time, this follows 14 consecutive rate increases from December 2021 to August 2023. This decision implies that the central bank may finally feel rates have reached their peak in the UK. The next announcement is slated for December 14.
One of the principal contributors to this momentary rate stability is the reduction in inflation. In September and August, inflation stood at 6.7%, down from 6.8% in July and 7.9% in June. This is still way above the governments target of 2% but is a good sign that inflationary pressures are easing.
The recent series of rate hikes commenced in the autumn of 2022, triggered by market uncertainty stemming from the now notorious mini-Budget announcement by former Prime Minister Liz Truss, which led to a sharp devaluation of the pound. This, in turn, prompted mortgage lenders to withdraw their offers and reintroduce them at higher interest rates. Although a correction in mortgage costs took place, the ongoing rise of the Bank Rate due to surging inflation led lenders to once again increase the cost of mortgage deals.
However with rates now seemingly at their peak and inflation dropping mortgage lenders are clamouring for new business and slashing rates on new products. With this as a backdrop and with property supply remaining at its lowest levels in years house prices actually rose by 0.9% in October according to data from Nationwide. This was the largest rise since in UK house prices since March 2022.
