The Bank of England’s (BoE’s) Monetary Policy Committee (MPC) voted 8-1 to keep the base rate at 5%.

Ben Thompson, deputy CEO of Mortgage Advice Bureau (MAB), said that it was “business as usual” in terms of interest rates, but there was “no need to worry, as this was signalled for some time”.

He added that it was “always unlikely” for the BoE to cut rates in consecutive months so early in the cutting cycle.

In August, the BoE cut the base rate for the first time since March 2020. Since then, some brokers have reported an uptick in enquiries and lenders have lowered trackers and standard variable rates (SVRs), along with fixed rates.

Thompson noted that there had been a range of rate cuts across the mortgage market for those refinancing and there were “innovations and reductions also coming for first-time buyers, it’s shaping up to be a positive autumn in the housing market”.

“For those yet to start on their journey to homeownership or for those soon to refinance, speak with a broker to get mortgage-ready,” he noted.

Base rate decision expected but lenders still cutting rates and widening criteria

John Phillips, CEO of Just Mortgages and Spicerhaart, agreed that the base rate decision was “widely expected” given the “cautious approach” that the BoE has adopted.

He pointed to inflation figures remaining unchanged, adding that it would have “certainly been a relief for the central bank, but not enough for it [to] change course and move to [a] sequential cut”.

“The Fed’s large cut last night wasn’t a big enough driver either, even with the central bank’s tendency to follow their lead. Nonetheless, sentiment continues to point towards the next cut coming in November, barring any surprises or potential shocks to the economy – either at home or from abroad.

“Even without another rate cut, though, we are continuing to see activity across the market, with lenders in all sectors making reductions and criteria changes to encourage new business and increase market share.

“From our perspective, clients have responded well to the changes in the market and returned from the summer break with house moves back on the agenda. The best brokers are already responding to this and are proactively positioning themselves to help clients navigate the market and seize opportunities,” Phillips added.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said that the market expected at least one further rate reduction before the end of the year, perhaps in November.

“There is a strong argument for the BoE to get on and cut rates again, giving borrowers an affordability boost, easing pressure on household finances and, in doing so, assisting the wider economy. If worries about the Budget are realised, the need to boost transactions and activity in the housing market will be all the more apparent,” he said.

Harris said that while the BoE had “failed to take action”, lenders are “reducing their mortgage rates regardless as they compete for business”.

He said: “Mortgage rates continue to soften, with Santander introducing a sub-4% two-year fix on the back of the lowest two-year swap rates in two years. There are also plenty of five-year fixes at sub-4% for those looking for certainty over a longer period.

“While rock-bottom rates have long gone, these reductions in mortgage rates are giving borrowers some comfort after a prolonged period of rising pricing. Competition between lenders is likely to mean further gentle reductions in mortgage rates as they vie for new business.”

‘Mortgage market has seen a bustle of activity over the last month’

Since the base rate was cut in August, the average SVR has fallen below 8% for the first time since August 2023, and currently stands at 7.99%.

Moneyfacts said that many lenders moved to pass on last month’s 0.25% base rate cut, seeing the SVR fall from 8.16% since the start of August 2024.

The company said that in September 2023, both the average two- and five-year fixed rates were above 6%, at 6.7% and 6.19% respectively. These average rates have fallen from 5.77% and 5.38% respectively since last month.

For 10-year fixed rate mortgages, the average rate has fallen from 5.98% to 5.63% since March 2024. The rate has fallen from 5.93% since the start of August 2024. The rate was 5.82% in September 2023.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “The mortgage market has seen a bustle of activity over the last month, with the BoE base rate cut and a more favourable swap rate market creating a positive influence on fixed rate pricing.

“There have also been several lenders passing on the 0.25% base rate cut to customers, leading to the SVR falling below 8% for the first time since August 2023. The expectations for another base rate cut are mixed, but it looks more likely that the next drop could come in November, which is after the Budget.”

She added: “New or existing borrowers will ideally want to see mortgage rates fall further in the months to come, particularly if they are about to come off a cheap fixed deal. Any borrower looking at their options today for peace of mind could lock into a fixed mortgage early, but it would be understandable for some to adopt a ‘wait and see’ approach, hoping rates will come down by bigger margins.

“Affordability remains a key issue for borrowers, particularly first-time buyers, but overall average mortgage rates are slowly dipping down to levels not seen for around six months. This month also marks the two-year anniversary of the fiscal announcement, so any borrowers about to come off a two-year fixed deal may be pleased to see the market is much more stable and lenders continue to chop rates to entice new business.”