What will this week's MPC decision mean for fixed rate mortgages

Our expectation for the short to medium term for mortgage rates is to raise in line with the Bank of England's base rate, which we expect to peak between 5.75-6.25%

I think we are all looking forward to inflation coming within the banks target of 2% and mortgages rates dropping to the expected new norm of around 4% by the end of 2024.

Given the speed with which rates increased rates on the back of swaps rather than BoE adjustments I think most lenders already have priced in a 25 basis point increase - they just didn't reduce their rates when swaps fell. However, if we see a 50 basis point increase then I fully expect lenders to adjust rates upwards which will be bad news for borrowers and the property market in general.

For mortgage pricing, the comments following the rate decision are just as essential as the rate decision itself. If the MPC maintains its tough approach, it may have an impact on the markets. The next round of inflation statistics, which will be released on the 16th, will be just as essential as the rate decision itself. If it results in a significant drop in inflation, we may witness the emergence of a pricing war.

The Bank of England MPC's decision on Thursday should have no impact on the fixed rates on offer, provided of course they raise the base rate by the expected 0.25% as this has already been priced in to the current products based on the swap rates. If the MPC do something more drastic though, then it could see an upward change in rates.

Markets have already priced in the expected 0.25% so not likely to see much change in fixed-rate mortgage pricing. If 0.5% is added, there is likely to be upward pricing in the fixed-rate market.

All in will be disappointing for everyone if the Bank of England doesn't stick to the agenda of battering down the ever-stubborn inflation with a soft quarter per cent. As the root of the problems we are facing, this needs to be tackled head-on, not tentatively. We still expect rates to peak around 6.25% in April 2024.

This meeting is the most pivotal we've had since the beginning of the rate hike cycle. Most economists expect a 0.25% rise, but most normal people with mortgages and loans want to see no increase. If the bank keeps rates on hold this would be super good news for homeowners as rates should fall quite a bit. This bank governor is not known for his convention and his incompetence could signal a 0.5% rise. This would be the final nail in the coffin of UK plc and a recession would be imminent.

The MPC are expected to announce a further increase to the BOE base rate this week. This will undoubtedly place greater worry on those who’s mortgage rates are due to expire within the next 6 months.

The MPC will say that any future rate rises will be implemented to ease inflationary pressures on the economy but sadly the two are not immediately linked.

It will take around 2 years for this weeks rise to affect enough of the population to have a significant enough impact on inflationary pressure. Therefore, to understand why inflation is not coming down as desired today, they need to look at the action they were taking 2 years ago which was historically low interest rates along and lots of money printing.

The data proves that too many home owners will struggle with running costs where they are today so any future rises are unnecessary and, in my opinion just designed to scare people into not spending, or incentivise people to save rather than spend.