Bank of England base rate remains at 5.25%

Last updated on 9 May 2024 by Claire Flynn

What is the current base rate?

In a move that has likely disappointed many existing and prospective homeowners, the Bank of England (BoE) Monetary Policy Committee announced today that they continue to hold the base rate at 5.25%. It’s been held at this level since August 2023, with the last in a succession of 14 increases. 

Several economists expect that the BOE will start to reduce the base rate by the end of the year, with some estimating June, and others as late as September for the first rate cut. However, it’s impossible to predict for certain. 

What does this mean for mortgage rates?

In the past few weeks, we’ve seen mortgage rates begin to edge up again, with six lenders increasing rates in the past week. There's been a lot of volatility in the market for a number of months now despite the base rate remaining stable.

Below, we list what the average fixed mortgage rate has been on each of the base rate announcement dates since August 2023 (on all of these dates, the base rate was 5.25%).

• 3 August 2023 - 6.2%

• 21 September 2023 - 5.8%

• 3 November 2023 - 5.4%

• 14 December 2023 - 5.2%

• 1 February 2024 - 4.7%

• 21 March 2024 - 4.9%

• 9 May 2024 - 5.2%

Given the rate changes we've seen since August, it's difficult to know exactly how lenders will react in the coming weeks and how mortgage rates could fluctuate.

How have base rate increases impacted first-time buyers?

We decided to look at the impact that the base rate decisions have had on our first-time buyer customers to date.

We can reveal that in April 2022, the average mortgage rate for a first-time buyer was 2.68%. For a property that costs £250,000 with a 10% deposit and a 30-year loan term, the monthly cost would be £910.

However, the same property (£250,000 with a 10% deposit) would now cost an average of £1,200 per month due to an average mortgage rate of 4.95%.

This represents an increase of £290 per month, which equates to:

• £3,480 extra over a year.

• £6,960 extra over a two-year fixed-rate mortgage.

• £10,440 extra over a three-year fixed-rate mortgage.

• £17,400 extra over a five-year fixed-rate mortgage.

This may be unwelcome news to those currently saving a mortgage deposit. But there have been some reports of house prices falling due to rate rises impacting affordability. This may mean you can secure a property for a lower price than a few years ago. 

Remember though, house price trends can vary significantly in different parts of the country. Keep an eye on local selling prices for the property types you’re interested in to see what you may be able to afford. 

And if you’re struggling to save a deposit for your first home, there are a number of schemes that may be helpful. A mortgage broker, like ourselves, can help you investigate your options.

All data featured provided by Mojo Mortgages and accurate as of 9 May 2024

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