"Now is the time for savers to lock in competitive rates" ahead of possible Bank of England rate cut as GDP stagnates

PRESSURE is mounting on the Bank of England to consider a rate cut meaning “now is the time for savers to lock in competitive rates”, one financial adviser has said following this morning's underwhelming GDP figures.

In August, the UK economy grew just 0.1% but the July figure was revised down to -0.1% from no growth. 

Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, said: "With growth stalling and wage momentum fading, pressure is mounting on the Bank of England to consider a rate cut but policymakers are walking a fine line.

"Inflation remains sticky and global yields volatile, leaving limited room for error. While some relief in mortgage and swap rates may follow, savers should expect returns to drift lower. Now is the time for savers to lock in competitive rates, stay diversified and remain flexible as the rate cycle turns."

Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said markets have increased bets on future rate cuts, which could benefit borrowers: "Given recent comments from the Governor about concerns over labour market data, future rate cut expectations have ramped up meaning we could see an improvement in fixed rate mortgage pricing if this trend continues. Borrowers may be in for some marginally better news."

Scott Gallacher, Director at Leicester-based Rowley Turton, said the latest GDP data will leave Threadneedle Street between a rock and a hard place: "The Bank of England will be conflicted, as today’s GDP figures show the economy needs a boost — but inflation remains well above target.

“A small rate cut before year-end is certainly back on the table, though still far from guaranteed. For homeowners, this could mean mortgage and swap rates edging down slightly in the coming weeks.

“Savers, however, should be ready — if rates do fall, the best deals will disappear quickly. Now could be a good time to lock in competitive fixed-rate savings while they last.”

Harry Goodliffe, Director at HTG Mortgages, added: "The economy’s clearly running out of steam. Weak GDP and slowing wage growth might just give the Bank the jolt it needs for one more cut this year. Inflation’s still a worry, and pressure is mounting to do something to keep things moving.

"Mortgage rates could edge down slightly if markets sense a shift, though it won’t be dramatic. As for Rachel Reeves, she’s hanging on to deliver the next Budget, and it’s shaping up to be a make-or-break moment for her."

Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said: "Another rate cut is definitely needed. The UK economy is flatlining at best, and unreliable data revisions make it hard for businesses and consumers to plan with confidence. 

"With the Budget delayed and everyone suspended in a state of economic limbo, the Bank of England has to step up and provide some stability. Confidence is on the floor and the country needs backing, not more waiting. 

"A symbolic rate cut, even just 0.25%, could lift sentiment, ease borrowing costs and show that policymakers haven’t fallen asleep at the wheel. Right now, the only thing growing is uncertainty."

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, said mortgage rates may lower slightly.

He added: “The UK economy is looking a bit like it’s on life support, with weak GDP and slowing wages, forcing the Bank of England to regularly check the health monitors. 

"If they give it a little rate cut CPR, we might see mortgage rates drift down slightly. This wouldn't be a full recovery, but even a little reprieve would help steady the nerves in an otherwise uncertain property market.”

Samuel Mather-Holgate, Independent Financial Adviser at Swindon-based Mather and Murray Financial, criticised the government.

He said: “It's surely time for Keir Starmer to kick Reeves out. After this week's shambolic jobs data, now our economy is flatlining and Reeves is talking about more tax cuts for her nightmare before Christmas Budget. 

"This is not what we voted for when the country cried out for change. In desperate need of a shot in the arm, the central bank is impotent to act as the IMF suggests the UK will have the highest inflation in the G7 next year. It’s time for new leadership in Number 11.”