The Bank of England has resisted the temptation to cut interest rates, which remain at 5%.

The decision comes a day after UK inflation stuck at 2.2% in August, above the Bank’s 2% target, with a rise in both core inflation and services inflation. Last month, its monetary policy committee voted to cut rates from 5.25% - the first reduction since the onset of the pandemic in 2020.

Andrew Bailey, the Bank of England’s governor, says cooling inflation pressure means the Bank should be able to cut interest rates gradually over the upcoming months, but adds: “It’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much.”

Reductions

Since the previous cut, many big lenders have announced reductions to their BTL products due to more favourable market conditions. Accord Mortgages and Virgin Money have both just dropped rates for buy-to-let mortgages; Virgin’s buy-to-let, five-year fixed rates with a 3% fee now start from 3.8% and rates with a £2,195 fee have reduced by up to 0.10%, now starting from 4.02%.

Nathan Emerson, CEO of Propertymark (right), says since the initial rate cut a few months ago, many people will have been closely awaiting any further anticipated cuts, however, it’s crucial the Bank of England continues to do this in a controlled and functional way, to not risk reversing economic progress.

Eventual

“Propertymark remains keen to see full consistency within the wider economy and for any eventual base rate cuts to create a pathway for people that provides long-term stability, confidence and affordability,” adds Emerson.

The Bank’s next announcement is due on 7th November – just after the Budget on 30th October.

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