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‘Enough is enough’ for homeowners as Bank of England urged to cut base rate

‘Enough is enough’ for homeowners as Bank of England urged to cut base rate
Matt Browning
Written By:
Matt Browning
Posted:
18/06/2024
Updated:
18/06/2024

The Bank of England has been urged to cut the base rate by a property advice group and "stop holding homeowners to ransom".

The HomeOwners Alliance (HOA) wants interest rates cut ahead of the Monetary Policy Committee’s (MPC’s) announcement on Thursday 20 June, as it feels the cost of borrowing is putting households under “immense strain”.

It follows a growing expectation that the MPC will keep the rate at 5.25% for the seventh consecutive time.

But, with the inflation rate announcement the day before being anticipated to confirm a drop to the bank’s target of 2% from its current 2.3% rate, the group believes a rate cut is in order.

The group compared the best rate for a two-year fix available for a remortgage in June 2022, which was 2.34%, to the best offer now of more than double at 4.82%.

It means a £250,000 mortgage over 25 years has risen by £333 in repayments, which adds up to a difference of £3,996 per year, according to HOA’s remortgage data.

Meanwhile, pressure has been on the Bank of England to bring the rate down since the European Central Bank (ECB) made the first rate reduction of the three major banks, cutting the base rate to 3.75% from 4%.

The rate was continually voted in favour of a hike in order to battle the lofty inflation rate, which peaked in October 2022 at 11.1%. That led to 14 successive rises by the MPC from December 2021.

‘Unacceptable’ that ‘homeowners are held to ransom’

Paula Higgins, chief executive of the HOA, believes the Bank of England has used inflation “as an excuse to keep interest rates at the current 16-year high”.

Higgins said: “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 this Thursday,” Higgins added.