Navigating the New Normal: Why you need to know about interest rates staying put

The housing market is a bit like a roller-coaster ride, isn't it? You've got your ups, your downs, and your twists and turns. And when it comes to interest rates, things can get even more topsy-turvy, especially if you're thinking about buying your first home. It's been a bit of a ride of late, hasn't it? Interest rates going up, down, and all over the place, making it tricky to plan ahead.

But now, it looks like interest rates are going to hang around where they are for a while. And that's something you need to know if you're diving into the home buying game. This might seem a bit frustrating, especially if you were hoping for interest rates to drop back down to the super-low levels we saw a couple of years ago. But fear not, it's not all bad news.

So, why should you expect interest rates to stay the same, and why are they not likely to drop back to where rate were before? Let's break it down.

The Monetary Policy Committee (MPC) in the Bank of England have the job of reviewing all sorts of economic data and setting the Base Rate for the BOE. It holds regular meetings throughout each year to decide if they're going to change the interest rates. And guess what? Since they last agreed to change the rate in August 2023, they've kept it level where it is now at 5.25%. That’s 4 times in a row they’ve voted to keep it the same. This time they’ve also published a report to go along with their decision, and the report explains their reasons for the decision and some expectation of where they think the rate may go next.

And this is why. The economy's not exactly doing cartwheels, but it's not crashing and burning either. By keeping interest rates steady, the bigwigs are trying to keep the economy on an even keel. They also expect that there will be a small increase in inflation again over the summer. Rather than put rates down too quickly only to have to potentially put them back up again, they’ve decided to hold fire.

That means you shouldn't hold your breath for interest rates to nosedive back to the bargain basement levels we saw a while back. And you shouldn’t hold off on getting on the property ladder in the hopes that it might be cheaper in the future. If you did that, you could wait for ever. This is the new normal, folks.

Now, it's not all doom and gloom. There's a bright side to this whole deal. For starters, knowing that interest rates aren't going to be changing anytime soon helps you plan ahead. You can figure out how much you can afford to borrow and how much you'll be shelling out each month for your mortgage. It's all about playing it smart with your money and not taking any unnecessary risks.

And here's another nugget of good news: when interest rates eventually decide to take a dip, you'll be sitting pretty when your fixed rate product comes to an end. It means you'll be paying less each month for your mortgage, which is a major win for your wallet.

So, here's the lowdown: get ready for the long haul. Interest rates aren't going to be doing any fancy footwork anytime soon, and that's alright. By embracing this new normal interest rate and planning ahead, you'll be in pole position to make your dream of owning a home a reality.

Empowering you with knowledge, one financial step at a time. Ready to take charge of your home buying journey? Let's make it happen. So, what's your move?

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