The Bank of England left interest rates unchanged at 5.25%, its highest level in 15 years.

The bank’s monetary policy committee (MPC) made the announcement today (2 November).

Its nine strong committee member voted six-three in favour of no action.

For the second meeting running, the MPC has decided to leave interest rates unchanged.

In September, the committee voted by a majority of five–four to maintain base rate at 5.25%.

The bank’s decision follows that of other major central banks that have already held borrowing costs.

The European Central Bank and the Federal Reserve have left interest rate policy unchanged in recent days.

Governor Andrew Bailey, in a press conference to explain today’s decision, said the Bank will be watching closely to see if further interest rate increases are needed.

He added that even if they are not needed, it is “much too early” to be thinking about rate cuts.

Bailey said inflation is forecast to drop to just below 5% in October, down from 6.7% in September.

The mortgage sector has followed the bank’s announcement with bated breath. This is because mortgage rates have risen significantly amid a string of Bank of England base rate rises.

Industry experts have welcomed the decision.

Tony Hall, head of business development, Saffron for Intermediaries, said:

“Today’s decision to maintain the base rate is another positive sign that the mortgage market is weathering the broader economic storm. This is especially poignant following the decision to stabilise rates in September, suggesting that we may enter the new year with a much more positive outlook than many expected at the beginning of 2023.

“Despite these signs of positivity, borrowers should still seek advice in order to navigate this complex market. Many customers will still be facing challenging financial situations, and the threat of payment shocks remain significant as they adapt to the new interest rate environment.”

Paul Glynn, CEO, Air, added: “After fourteen consecutive increases in the base rate, last month’s decision was a strong indication that the market was finally settling into a steadier groove. The decision today continues the trend, confirming earlier predictions by economists that inflation would drop to a more manageable level before the end of 2023.

“It is still essential that aspiring first-time buyers and existing homeowners lean on professional advice during this challenging time. An adviser can draw upon years of experience to help customers secure a deal that is tailored to their circumstances. This is especially true for the over-55s, who may be feeling the impact of inflation as it erodes fixed incomes and pension pots.” 

Steve Seal, CEO, Bluestone Mortgages, also said: “Today’s decision to hold interest rates is welcome news for borrowers across the country. Though rates have somewhat stalled, they are still at a historic high and it looks unlikely that there will be any cuts on the near horizon. Without a doubt, affordability will remain the key challenge for would-be and existing borrowers across the country.

“For those worried about how they can take their first or next steps onto or up the property ladder amid the current environment, rest assured that there is still help at hand. Mortgage brokers have a vital role to play in signposting customers to the best available options to suit their unique circumstances and help make their homeownership dreams a reality.”