Interest rates stay put for the first time since 2021

Analysts were proved wrong about August’s inflation figures when it fell for the third month in a row¹. Prices are still increasing, but at their slowest rate in over a year.

After the inflation data was released, most financial markets and economists were divided on whether the Bank of England would increase the base rate of interest at their September meeting. Previously, the experts had been fairly sure of one last 0.25% increase in 2023. But, the Bank of England agreed to keep the base rate at 5.25% – the first time they’ve left rates unchanged since November 2021. It was a very close call, however, with members voting 5-4 to maintain the rate.

Inflation is still much higher than anyone would like it to be, but this news is a welcome relief – especially for homeowners on variable rate mortgages who have been watching their repayments go up each month.

Now that slightly more competitive fixed deals are starting to return, it’s worth checking the latest mortgage deals to see if you could find the right one for you. Rates have been slowly decreasing for the last six weeks. The brokers at Moneybox Mortgages can show you your options, as they compare thousands of deals that update daily. Head in-app to Accounts > Mortgages to start a conversation. 


House price growth continues to slow

July’s UK House Price Index, which tracks the prices of all properties sold in the UK, showed that house prices have risen by just 0.5% since June. It’s a long way from the month-on-month growth we were seeing 12 months ago. Prices are 0.6% higher than they were this time last year, with the average UK property now setting you back around £290,000.²

It’s definitely a buyer’s market right now for those who can afford the mortgage repayments. In the first week of September, the number of new properties on the market increased by 12%, compared to the average weekly number in August.³ This is positive news for buyers who may have felt frustrated by a lack of choice over summer. Those who want to press on with their plans are doing so, while factoring higher borrowing costs into their budget.


Mortgage approvals exceeded market expectations

Net approvals of mortgages for house purchases in the UK decreased to 45,400 in August 2023. This was down on July’s revised figure of 49,500 – but it still slightly exceeded market expectations of 45,000. During the same period, approvals for remortgaging, which only include remortgages with a different lender, dropped to 25,000 – the lowest since July 2012. The ‘effective’ interest rate, representing the actual interest paid on newly drawn mortgages, rose by 16 basis points to 4.82%.⁴


Closing thoughts

There’s a lot to unpack in this update and you might be wondering where all of this leaves you. At the moment, it’s difficult to predict if we’ll see interest rates start to fall, or if they are just levelling out to a new normal. So, whether you’re buying your first home or remortgaging, it’s a great time to look at your budget and assess whether to go for it now, or hold out a little longer. Whatever you decide, we’ll be here every step of the way.


¹ Source: Office of National Statistics (ONS) CPI Annual Rate of Inflation

² Source: GOV.UK Land Registry (UK House Price Index for July 2023)

³ Source: Rightmove House Price Index, September 2023

Source: Trading Economics, UK Mortgage Approvals for August 2023 


Moneybox Mortgages is provided by Moneybox Mortgages Ltd.

Your home may be repossessed if you do not keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.