While the Bank of England’s decision to keep interest rates at 4.75% was not surprising, mortgage experts have warned that it could “trigger some negative responses”. 

David Hollingworth, associate director at L&C Mortgages, said  markets are anticipating that stubborn inflation may hold back the pace of any base rate cuts next year. 

“I expect mortgage lenders to be quick out of the blocks in January and to continue to price as sharply as possible, but the Bank has been consistent in its tone, suggesting the likely pace of rate cutting will be gradual,” he said. 

“On a positive note, the market is ending the year with better rates than when it began, and that looks likely to be true this year.” 

However, he noted that borrowers will look at today’s rates with varied perspectives.

He warned that those approaching the end of a five-year fixed rate below 2% will be bracing themselves for the pain of higher monthly payments.

“On the other hand, those that fixed 2 years ago in the wake of the mini-budget will be chomping at the bit to take advantage of the lower rates now available,” he added. 

Ross Turrell, commercial director at CHL Mortgages, said a rate cut today was always unlikely due to inflation ticking up, and concerns about the longer-term impact of the Autumn budget.

“The news might trigger some negative responses, particularly among property buyers holding out hope for lower mortgage rates,” he said. 

“However, Governor Bailey has strongly indicated that the base rate could be cut by 1% across the next 12 months, which will likely result in a significant surge in buyer demand and market activity in the new year.” 

Paresh Raja, CEO of Market Financial Solutions, said the decision to maintain the base rate should not be seen negatively, urging people to “see the bigger picture” and reflect on the progress made in 2024. 

“Put simply, the market is in a stronger position today than it was 12 months ago, and this lays the foundations for some exciting opportunities for lenders, brokers and property investors alike in 2025,” he said.