Experts say there is no chance of a cut in interest rates being announced by the Bank of England ’s Monetary Policy Committee. This is despite Consumer Price Index inflation now hitting the official 2% target.

Sarah Coles from business consultancy Hargreaves Lansdown says the smart money is on a cut soon, but not today.

“This could come in August or September, and we’re currently expecting a couple of cuts before the end of the year. This will be a welcome change given how long people have been waiting for them, but it’s not a spectacular overnight move, so mortgages are still likely to be uncomfortably expensive for the rest of 2024. For those who need to remortgage in the near future, things are still looking relatively miserable, and Moneyfacts figures show the average two-year fixed rate rose from 5.56% at the end of January to 5.97% this week. This is despite pricing in potential cuts later in the year, so we’re unlikely to see significant movement until the market sees more cuts on the cards.”

Ben Thompson, deputy chief executive at Mortgage Advice Bureau, also believes the base rate drop will be soon but not today: “May’s inflation drop, in other circumstances, may have prompted some positive movements in the mortgage market. But, with rate cuts largely priced in, the Fed dragging its heels and a General Election in a matter of days, the Bank of England will be reluctant to make any waves. 

“This doesn’t mean it’s a time to sit still for those aiming to get on the property ladder or with mortgage deals due to expire. Mortgage rates are unlikely to drop really significantly when the Bank of England does cut rates, so now is the time to get on the front foot, speak to a broker and get mortgage ready. There are competitive deals on the market to be taken advantage of.”

Nicholas Mendes, technical manager at high profile independent brokerage John Charcol, is even forecasting how the Monetary Policy Committee today will split in its decision on a base rate cut.

He says: “With the ongoing general election campaign, can expect a likely 5/4 split decision to hold rates steady as the Bank aims to maintain a neutral stance.

Market predictions indicate a 50% chance of an initial rate cut to 5% by August, with a potential total decrease of 0.5% by the end of the year. Given that mortgage rates are influenced by swaps reflecting market expectations of future interest rates, we are likely to see a shift in fixed-rate pricing, suggesting a positive turn as we move into the second half of the year.”

This is likely to annoy the consumer champions at the HomeOwners Alliance, who say there is now no excuse not to cut rates.

The HOA claims the hikes in the cost of borrowing is putting household finances under enormous strain. If you’re remortgaging the best rate on a two year fix this month is 4.82% – this rate is over double the best rate on a two year fix that was available in June 2022 which was 2.34%.

For someone with a £250,000 mortgage over 25 years this means a monthly mortgage payment of £1,435 compared to £1,102. This is an increase of £333 per month or £3,996 a year.

The HOA says many households have found these increases impossible to afford: UK Finance figures show 870 homes were repossessed in the first quarter of 2024 – a 36% jump compared to the previous quarter. While 96,580 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance, during the same period – a 3% increase on the previous quarter.

The Bank of England has repeatedly argued that interest rates needed to increase or remain at 5.25% to fight inflation.

It has raised rates 14 times since December 2021 to bring down inflation which went from 5.4% December 2021 to 11.1% in October 2022 and has now dropped back to the target of 2%.

Paula Higgins, HomeOwners Alliance chief executive, says: “Inflation is no longer running at 10% … And yet the Bank of England continues to use it as an excuse to keep interest rates at the current 16 year high. We think it’s unacceptable that homeowners are held ransom by the Bank of England in this way.

“Signalling that rate cuts are on the horizon is not enough. We’ve been hearing that since March. Homeowners’ best-laid financial plans are on hold as they bear the brunt of the Bank of England’s monetary experiment. We cannot see any justification for this continuing.

“The burden is too heavily borne by mortgage borrowers. This is why we’re calling on the Bank of England to stop this attack on homeowners and drop the base rate.”