The Bank of England (BoE) has voted to hold interest rates at their current level for the second meeting in a row, keeping the central bank’s base rate at 5.25%.

At its latest meeting, the Monetary Policy Committee (MPC) at the BoE voted by a majority of six to three in favour of maintaining interest rates at 5.25%, their highest level in 15 years.

Three members, however, voted for a further 0.25% increase that would have taken rates to 5.5%.

Last month’s pause in the recent rate hiking cycle ended a run of 14 successive base rate increases, which had seen the BoE gradually raise rates since December 2021 from a historic low of 0.1%.

This flurry of interest rate hikes has formed part of the BoE’s efforts to curb inflation, which remained at 6.7% in September, a level unchanged from August, according to the Office for National Statistics (ONS).

In the latest MPC report, the BoE acknowledged that inflation remains well above its 2% target but is “expected to continue to fall sharply”, as it projected falls to 4.75% in Q4 2023, 4.5% in Q1 2024 and 3.75% in Q2 2024.

“This decline is expected to be accounted for by lower energy, core goods and food price inflation and, beyond January, by some fall in services inflation,” the BoE stated.

“The MPC’s latest projections indicate that monetary policy is likely to need to be restrictive for an extended period of time,” it also added.

Central bank efforts to curb the rate of inflation have led to large increases in mortgage payments for many homeowners across the UK over the past year.

Deputy CEO at Mortgage Advice Bureau, Ben Thompson, said that today’s hold in interest rates is “good news” for those with mortgage deals expiring soon, and prospective buyers looking to get onto the property ladder.

“Another hold is likely a sign that the BoE has now concluded this cycle of interest rate hikes,” Thompson commented. “But we mustn’t get complacent. This could very much change in the coming months based on how, and indeed if, inflation continues to fall.

“The mortgage market has already seen drops in the swap rates used to calculate mortgage prices, and there is hope that a second consecutive pause might mean more reductions ahead for homeowners. Prospective buyers and mortgage customers will be relieved by the prospect of a steady rate, and hopefully not too distant reductions in the base rate.”

However, mortgage operations manager at Wesleyan, Clare Batchelor, warned: “Interest rates may have been held again, but there is little to celebrate here.

“Anyone looking to remortgage will still struggle to find affordable deals and, even though house prices are now falling, the number of new mortgage approvals has fallen.

“While there are good reasons to believe that we are now at the peak of the rate rise cycle and inflation is starting to cool, lenders don’t seem to have the confidence to start offering better deals just yet. This makes it even more important for people to shop around. Using a broker can help unlock the best deal in a volatile market.”

CEO of Spicerhaart and Just Mortgages, John Phillips, added: “While inflation stagnated in September, the general consensus is it will continue its downward trend. In the mortgage market, today’s news will hopefully offer some stability and give lenders the confidence to take a further look at their books and continue to price more competitively.

“Even so, affordability remains a key blocker preventing many from pushing ahead with plans. With the expectation that rates will stay higher for longer, brokers must throw their arms around clients and educate them about the tools available to help make the numbers work and support borrowers of all backgrounds.”

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