No surprises as MPC holds Bank Rate at 4%
A further cut this year is still possible, but the outlook for the Bank Rate is now far less certain.
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Katie Wise
Commenting on the MPC’s decision not to change the Bank Rate from 4.00%, Paul Broadhead, Head of Mortgage and Housing Policy at the Building Societies Association (BSA) said:
“CPI Inflation has remained elevated at 3.8% and is expected to stay higher for longer, so it’s no surprise that the MPC has decided to hold the rate at 4.00%. A further cut this year is still possible, but the outlook for the Bank Rate is now far less certain.
“For many would-be first-time buyers another Bank Rate cut couldn’t come soon enough. Despite the availability of innovative mortgages from building societies to help those with smaller deposits, and recent regulation changes enabling lenders the flexibility to lend to more borrowers, mortgage affordability remains one of the biggest barriers to homeownership. Our research shows 61% of first-time buyers¹ citing this, with mortgage repayments for new buyers around 30% higher than five years ago, rising from 18% to 22% of income².
“While affordability pressures remain, having good savings habits can help all households build resilience against financial shocks. Next week is UK Savings Week where building societies, credit unions, banks, charities and many other organisations will come together to encourage families and individuals to make the most of their money. With almost £300 billion of savings sitting idle in accounts paying no interest, simply moving money could put hundreds of pounds into people’s pockets.”
Ends
¹ Property Tracker
² The Missing Millions
About the BSA
The Building Societies Association (BSA) represents all 42 UK building societies, as well as 2 mutual – owned banks and 7 credit unions. Building societies and mutual – owned banks have total assets of almost £650 billion. They hold residential mortgages of over £485 billion, 29% of the total outstanding in the UK. They also hold over £485 billion of retail deposits, accounting for 23% of all such deposits in the UK. Building societies and mutual - owned banks account for 47% of all cash ISA balances.
They employ around 52,300 full and part-time staff and operate through approximately 1,300 branches, a 30% share of branches across the UK.
“CPI Inflation has remained elevated at 3.8% and is expected to stay higher for longer, so it’s no surprise that the MPC has decided to hold the rate at 4.00%. A further cut this year is still possible, but the outlook for the Bank Rate is now far less certain.
“For many would-be first-time buyers another Bank Rate cut couldn’t come soon enough. Despite the availability of innovative mortgages from building societies to help those with smaller deposits, and recent regulation changes enabling lenders the flexibility to lend to more borrowers, mortgage affordability remains one of the biggest barriers to homeownership. Our research shows 61% of first-time buyers¹ citing this, with mortgage repayments for new buyers around 30% higher than five years ago, rising from 18% to 22% of income².
“While affordability pressures remain, having good savings habits can help all households build resilience against financial shocks. Next week is UK Savings Week where building societies, credit unions, banks, charities and many other organisations will come together to encourage families and individuals to make the most of their money. With almost £300 billion of savings sitting idle in accounts paying no interest, simply moving money could put hundreds of pounds into people’s pockets.”
Ends
¹ Property Tracker
² The Missing Millions
About the BSA
The Building Societies Association (BSA) represents all 42 UK building societies, as well as 2 mutual – owned banks and 7 credit unions. Building societies and mutual – owned banks have total assets of almost £650 billion. They hold residential mortgages of over £485 billion, 29% of the total outstanding in the UK. They also hold over £485 billion of retail deposits, accounting for 23% of all such deposits in the UK. Building societies and mutual - owned banks account for 47% of all cash ISA balances.
They employ around 52,300 full and part-time staff and operate through approximately 1,300 branches, a 30% share of branches across the UK.