Bank of England Holds Rate at 5% – Should You Fix or Ride the Variable Wave?
The lazy days of summer are behind us, and just like students returning to classes, UK homeowners are facing a new economic reality this autumn after the shake-up of general elections.
For those navigating the remortgage maze, the landscape looks drastically different from just a few months ago. The summer offered a brief mortgage rate reprieve as the Bank of England cut the base rate from 5.25% to 5.0% amid easing inflation. However, whispers are already swirling about another potential reduction before year-end under the new government’s policies.
And today’s decision to hold the base rate at 5% only muddies the mortgage pricing waters further. Do you lock in that new fixed mortgage deal now for much-needed certainty? Or roll the dice on variable rates continuing their downward trajectory over the coming “academic” year?
For a £200,000 mortgage, the scenarios compare as follows:
Example rates:
- 2-year fixed: 4.45% = £1,143 per month
- Variable tracker: 4.95% = £1,167 per month
If base rate drops by 0.25% After 3 Months:
- New variable rate: 4.7% = £1,034 per month
If base rate drops Another 0.25% After 6 Months:
- New variable rate: 4.45% = £1,001 per month
Cost comparison over 2 years:
| Rate type | Total cost |
| 2-Year Fixed @ 4.45% | £27,432 |
| 2-Year Variable | £24,621 |
| Difference | 2,811 |
In this scenario, riding the variable path with the projected 0.5% total rate drop could save £2,811 over 2 years vs. fixing now. However, it requires higher interim costs up to £1,167 for 6 months before potentially lower £1,001 payments.
The fixed rate’s £1,143 payment provides certainty, protecting borrowers from pricing volatility. But at what opportunity cost if recovery allows variable rates to keep declining?
At Dwello, our remortgage consultants use modelling to analyse potential pathways. We provide transparent fixed vs. variable comparisons, ensuring you confidently execute your personalised “Yes!” moment aligned with your finances.
The only constant in today’s market is change. Book your Dwello consultation to cut through the noise with expert guidance tailored to your unique mortgage needs – no matter what turbulence the new economic era may bring.
The information contained in this article does not constitute financial or mortgage advice from Dwello Mortgages. It is provided for general informational and educational purposes only. No information contained constitutes a solicitation, recommendation, endorsement or offer by Dwello.
Dwello is not making any representations or warranties, and assumes no liability, for the content provided in this article, including any third party information. Consumers should always consult their own financial advisors before making any mortgage or remortgage decisions based on this type of general market commentary and analysis.
All mortgage pricing, rate scenarios and cost comparisons used are hypothetical examples. Actual rates, fees and mortgage costs may vary based on the specific lender and the individual borrower’s personal financial circumstances.
Dwello Mortgages, a trading style of Dwello Mortgages Limited is an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Dwello Mortgages Limited is registered in England and Wales with company number 14432864. Registered Office: St James House, Hollinswood Road, Telford TF2 9TW
