Mortgage lenders are cutting rates despite the Bank of England decision yesterday to hold the base interest rate at 5%.

The Bank’s Monetary Policy Committee voted by a majority of 8–1 to maintain the rate at 5% after making a cut of 0.25% last month.

War on inflation

Many experts expected the Bank to hold the rate this time, but to make a cut in November and December once it considers the war on inflation is won.

The inflation rate held stubbornly at 2.2% in July, it was announced yesterday, which may have influenced the Bank of England away from a cut.

But the Federal Reserve in the US cut its base rate for the first time in four years, which some analysts believed may persuade the Bank to consider reducing the UK rate.

Cutting rates

Meanwhile, some banks and building societies are still cutting mortgage rates.

Virgin Money dropped its rates for both residential and buy-to-let mortgages by up to 0.2% to as low as 3.99%, the Daily Telegraph reports, while Halifax cut rates for first-time buyers and home movers by up to 0.09%.

And Principality Building Society cut its rates by up to 0.25%.

Earlier this week, Santander became the first lender to offer less than 4% on two-year fixed rate, at 3.99%.

Variable rate

Following last month’s Bank base rate cut, the average Standard Variable Rate (SVR) fell below 8% for the first time since August 2023, down from 8.18% in March, according to Moneyfacts.

Since March this year, the average two and five-year fixes have fallen from 5.76% and 5.34% to 5.56% and 5.2%. The average rate for a 10-year fixed loan has fallen from nearly 6% in March to 5.63%.