UNCERTAINTY remains over whether lenders “on both sides of the Channel” will drop interest rates – despite the Bank of England lowering its base rate this month – according to a local mortgage consultant.
Peter Seymour spoke after the Bank of England Monetary Policy Committee announced a base-rate reduction from 4.75% to 4.5%, its lowest level since June 2023.
In a statement, the Bank of England said that two MPC members would have preferred to reduce it even further, to 4.25%.
“The committee judges that there has been sufficient progress on disinflation in domestic prices and wages to reduce [the] bank rate,” it explained.
“Based on the committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate.”
Commenting on whether this could translate into good news for Islanders, Mr Seymour explained that lenders were also influenced by SONIA (Sterling Overnight Index Average) rates.
“Towards the end of last year, SONIA rates were so high that lenders were forced to put their rates up rather than reduce them. The reason behind this is that SONIA dictates what the lenders are paying for the money they subsequently lend out,” the mortgage expert explained.
Acknowledging the current SONIA rates – standing at an average of 4.7% – Mr Seymour added: “I’m really quite concerned about whether lenders on both sides of the Channel will, in fact, reduce their rates. They’re obliged to do so with their tracker rates, because that’s part of the deal. But then fixed rates for the future, I really don’t know.”
Jersey Consumer Council chairman Carl Walker noted that many Islanders were still “struggling with the repayment on their homes and loans” following large jumps in interest rates seen in recent years.
“We know that banks in Jersey are slow to pass on any drops in interest rates, so local borrowers may not see any benefit from the latest drop unfortunately.”
