Bank of England Base Rate Announcement: December 2024

In their final meeting of the year, the Bank of England has just announced interest rates will stay the same for another few weeks. You might have some questions about what the news means for you – let's take a look.  

What happened with interest rates today?   

The Bank of England voted today that interest rates will hold steady at 4.75%. Rates have dropped twice this year already, though. Beforehand, the rate had stayed at 5.25% for a long time. So, there are a few things we could take from the news.  

Why did the rate stay the same?   

Every 6(ish) weeks the Bank of England reviews the base rate at their MPC (monetary policy committee) meeting. It moves up and down (or stays the same) to help control inflation in the UK.   

Rates tend to rise as inflation goes up. A lower rate encourages people to spend their cash to help the economy grow. So, if rates aren’t on the rise and are staying the same, it indicates inflation is under control for now.  

What does no change mean for the housing market?   

We don’t know for sure. The reasoning usually goes that higher interest rates are passed onto borrowers through higher mortgage rates. This can mean fewer people are looking to buy houses, meaning the price of homes could drop.  

So, the lowering of the rate earlier this year is encouraging for new buyers, as mortgages will likely become slightly more affordable. This could bring up demand for houses, and maybe prices. But there are a lot of other factors, so we’ll have to see. 

What does no change mean for my mortgage?   

It probably means things are staying the same. The earlier drop in rates is good news for first-time buyers looking for a mortgage. But if you already have a mortgage, and your rate is locked in (often called a ‘fixed’ mortgage), there won’t be any immediate change. Your rate will stay the same until your fixed term ends – whatever the interest rate does.  

If you’re on a tracker mortgage or a standard variable rate (SVR), the monthly cost tends to move in line with the base rate, so you probably won’t see any immediate change either. You could be affected by future Bank of England announcements, though, so it's good to stay tuned. 

Rate expiring soon? It’s good to talk to a lender or a broker — because the standard variable may be a lot more than what you're on now. 

What happens next time?    

There are a few predictions out there. Some suggestions say interest rates will lower to around 3.75% by the end of 2025, some think it’ll take longer to drop – but we can’t really know for sure. We’ll have to wait and see.  

In the meantime, feel free to reach out – we’re here if you need us.