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Mortgage lenders aren't waiting for a Bank rate decision published at 11:18 BST Kevin Peachey Cost of living correspondent Image source, PA Media The Bank rate has a direct impact on mortgage repayments for borrowers on tracker and variable rate deals. It also sets the tone for the direction of fixed-rate deals. The vast majority of homeowners have fixed deals, so the interest rate does not change until the end of the term, which is usually two or five years.
However, mortgage funding is complicated. So, pretty much all the major lenders have been raising the rates on new, fixed deals in recent days. That's because the markets anticipate the Bank of England may need to increase the benchmark rate in the coming months, and so lenders' own funding costs are going up.
It means the average two-year fixed residential mortgage rate is at its highest since 22 May, at 5.83%, while the average five-year rate is at its highest since 6 November 2023, at 5.87%, according to financial information service Moneyfacts. Good morning from the Bank of England published at 11:17 BST Dearbail Jordan Senior business and economics reporter Hello from the Bank of England in London, where BBC apprentice Anuk Weerawardana and I will find out if UK interest rates will rise, fall, or stay at 3.75%. We'll also learn if the Bank is going to reduce or stop selling its massive trove of government bonds.
The Bank will make the announcement at midday - when BBC News will also publish a news story all about it. How does this happen at the same time? The secret is journalists get to read the Bank's decision an hour or two before its wider release.
Because this is market sensitive information, the Bank of England locks us in its basement to prevent leaks. Theoretically, a trader could make a lucrative bet on the decision if they had prior knowledge. To ensure nothing gets out, we have to hand over our mobiles and the wi-fi is switched off.
Between now and then, we'll read, ruminate and write, fuelled by lots of tea and too many biscuits. By the time 12:00 BST rolls around, the wi-fi is switched on - and our words wing their way to you. See you on the other side.
Why did the US raise rates? published at 11:14 BST On Wednesday, the US Federal Reserve raised its interest rate for the first time in more than three years. Our correspondent Samira Hussain looks at why: Media caption, Watch: How will higher interest rates impact US consumers? It's not all about rates today published at 11:09 BST Katie Hope Business reporter It’s not all about interest rates today, as the Bank of England will also tell us what it plans to do on bond sales.
The Bank bought a huge amount of bonds at a high price – essentially government IOUs – during the Covid pandemic and the financial crisis to keep the economy going. It has since been selling them again, but at a loss due to higher borrowing costs. If it decides to slow down the pace of sales - or even temporarily halt them - then these losses will be lower or stop altogether.
The move would be beneficial for the government’s finances, as the Treasury has to cover these losses. So it could help Chancellor John Healey who is trying to free up money to fund spending at next month’s Budget. Bank expected to hold rates - but there could be a surprise published at 11:01 BST Faisal Islam Economics editor I’m on my way into the Bank of England for an interest rate decision, as I have done - on and off! - for over a quarter of a century.
While the Bank is widely expected to hold rates at 3.75%, other major central banks - including the US Federal Reserve - are now raising rates, as rising energy prices feed into higher inflation. The expectation among economists however is that the nine-member committee which decides rates will keep them on hold today, with a rise in November or December. There is, though, the recipe for a surprise rise here.
The energy market scenario is tracking worse than the adverse scenario outlined by the Bank earlier in the year. There have been splits in recent months, as the Bank weighs up whether rising inflationary pressures are largely contained in energy prices. And the complex business of Bank of England’s sale of its stocks of government debts also looms large.
It could help calm debt markets. Government borrowing costs have risen substantially, into rather painful territory, in the UK and around the world in recent weeks. Bank of England to announce interest rate decision soon published at 10:56 BST At midday, the Bank of England will announce its latest decision on interest rates.
This is the base rate the Bank charges other lenders to borrow money. When it changes, it can affect the deals that High Street banks offer on mortgages, other loans - and savings accounts. Despite turmoil in the Middle East - and a surge in oil prices - economists are expecting the Bank's Monetary Policy Committee (MPC) to hold the benchmark rate at 3.75% for its sixth consecutive meeting.
This comes after the US Federal Reserve decided on Wednesday to raise interest rates for the first time in more than three years, in a bid to slow rising prices there. Also in focus is whether the Bank decides to slow down its sell-off of government bonds, which it bought in large quantities after the 2008 financial crisis - we'll have more on that soon.
Source: BBC
