Bank of England Will Cut Rates sooner rather than later, say experts

A poll of leading economists for London-focussed business newspaper City AM reveals that some believe a Bank of England base cut could come as soon as March.

Nearly a third of the 21 experts surveyed believed the BoE would cut rates in March, while a similar number said they would be cut in May. Some 19 per cent went for June while 29 per cent went for August.. The most hawkish economists went for 2025.

Nearly 86 per cent of the economists said the Bank’s monetary policy committee – three members of which voted to raise rates in December – were too hawkish in their rhetoric on interest rates as they try to lower inflation without tipping the economy into recession.

Meanwhile swap rates have continued to fall and brokers expect lenders to cut mortgage rates further in the coming weeks, whatever happens with the Bank of England.

Matt Smith, Rightmove’s mortgage expert, says: “It looks like lenders are likely to give early 2024 movers the belated Christmas present of lower mortgage rates. After the reduction in swap rates we saw before the holidays, this is now starting to filter through to mortgage rates now that the festivities are over and the working year has begun. 

“Unless things change, the signs are positive that lenders will reduce rates further over the coming weeks. Combined with the early-year bounce in home-mover activity we're starting to see, lenders who price more competitively can expect growing interest from those looking to take out a mortgage soon."

The latest batch of reductions actually started just before Christmas with the lender Generation Home releasing a five year deal at 3.94 per cent - the first in recent times to fall below the psychologically-important four per cent level. Many others have followed suit.

Halifax, the country’s largest mortgage lender, slashed its two-year remortgage rate by 0.83 per cent. Other lenders under Lloyds Banking Group, including Scottish Widows, First Direct, Shawbrook, TSB and BM Solutions, also made cuts. Leeds Building Society lowered rates on 90 deals by as much as 0.49 per cent and HSBC yesterday announced its five-year fixed rate for remortgage customers with a headline rate of 3.94 per cent for those borrowing up to 60% of the property value.

L&C Mortgages associate director David Hollingworth says: “These cuts are just the latest salvo in an increasingly fast-moving market.  These rates are offering some of the lowest rates since the spike in rates last summer. These cuts follow hot on the heels of New Year improvements by Halifax and others will be bound to follow suit.  We thought the New Year would start with a bang and that’s proving to be the case.”