The Bank of England has held the interest rate at 5.0%, which was expected but could still come as a disappointment to some mortgage holders.

Eight of the nine members of the Monetary Policy Committee opted to keep it unchanged, with external MPC member Swati Dhingra opting for a cut.

The US Federal Reserve made a 0.5% rate cut yesterday, though this represented something of a catchup, as it was the first US rate cut since the covid-19 pandemic.

CPI inflation remained at 2.2% in August, close to the 2% target, and if that stability continues it’s likely at least one rate cut could follow in the months ahead. The next MPC meeting is on 7 November.

Sam Richardson, deputy editor of Which? Money, said: “The Bank’s decision to hold rates where they are won’t come as a surprise, but will nevertheless still be a disappointment to homeowners coming towards the end of their fixed-term deal who would have been hoping for downward movement in the market.

“Mortgage rates have been falling gradually, with the market-leading two-year fixed rate dropping below 4% for the first time in two years earlier this week. While sub-4% deals have made the headlines, they’re only available to people with the very biggest deposits.

“Many households are still struggling, and while this decision means that rates are unlikely to rise beyond current levels, the pace of rate cuts is now likely to slow down.

“As ever, the most suitable mortgage option will depend on the applicant’s individual circumstances. If you’re unsure about which deal is best for you, then consider talking to a mortgage broker.”

Jason Tebb, president of OnTheMarket, said: “As widely expected, the Bank of England has voted to hold interest rates at 5%.

“Even though inflation is seemingly under control at 2.2 per cent, there are concerns that it may increase over the autumn on the back of higher energy bills.

“The Bank remains cautious for now, although the markets expect another rate cut before the end of the year, particularly now as the Federal Reserve has also taken the plunge and reduced rates.

“While there hasn’t been a reduction in base rate this time around, this hold suggests a more stable outlook which is welcome after the pain of consecutive rate hikes and enables borrowers to plan ahead with more confidence.

“Meanwhile, softening mortgage rates are helping release some pent-up demand as buyers and sellers who have been waiting to see what happens with interest rates finally make their move.”

Via @PropertyWire