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Base Rate decision ‘on knife edge’ due to ‘sticky’ inflation – analyst calls for reduction | Personal Finance | Finance

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Base Rate decision ‘on knife edge’ due to ‘sticky’ inflation – analyst calls for reduction (Image: Getty)

approvals for house purchases have fallen to their lowest rate since January while net approvals for remortgaging have fallen to their lowest point in 24 years, new data shows.

According to the Bank of England’s (BoE) latest Money and Credit Report, net mortgage approvals fell from 45,400 in August to 43,300 in September and net approvals for remortgaging fell to 20,600 from 25,100. It also showed net borrowing of mortgage debt decreased from £1.1billion in August to -£0.9 billion in September – the lowest since April 2023.

Meanwhile, the ‘effective’ interest rate, which refers to the actual interest paid on newly drawn mortgages saw a 19 basis point increase and now sits at 5.01 percent.

Alice Haine, personal finance analyst at investment platform Bestinvest, commented: “Mortgage approvals continued to fall in September, dropping by almost five percent as high mortgage rates caused major affordability challenges for buyers, with continued cost of living pressures also making it harder for buyers to secure the homes they want.

“Net approvals for remortgaging, which captures remortgaging with a different lender, also saw a rapid decline in September as more homeowners stuck with their existing lender rather than switch to a new provider to avoid affordability checks.”

READ MORE: Jeremy Hunt mulls major inheritance tax cut ahead of Autumn Statement

Couple looking concerned at letter

Mortgage approvals plunged in September due to affordability pressures (Image: Getty)

Ms Haine added: “Mortgage lending also plunged in September – a reflection of buyers treading more conservatively by shunning larger family homes in favour of smaller, lower-value homes to meet lenders’ affordability criteria. The shift in buyer appetite and uncertain economic outlook is likely to result in further weakening in mortgage lending in the coming months.”

The decision to pause interest rate hikes last month offered buyers “welcome respite” from the barrage of rate hikes since the end of 2021.

However, Ms Haine noted: “Now all eyes are focused on Thursday’s meeting to see whether the central bank will continue holding interest rates at 5.25 percent or deliver its 15th rate hike – a decision now on a knife edge following September’s stubbornly sticky Consumer Prices Index Inflation reading, which was unchanged at 6.7 percent.

“If the BoE decides to pause again, it would deliver some early Christmas cheer for first-time buyers and homeowners looking to refinance.”

However, Ms Haine said there is room for a little optimism. She explained: “Improving interest rate expectations have already fed through to the market, with average two five-year fixed rates dropping over the past month as lenders compete more aggressively for business.

“Pair that with softening and first-time buyers may be able to secure slightly better deals, though they should be wary of overextending themselves in a falling market. Taking on a large mortgage that may be difficult to repay if a financial situation later deteriorates is unwise in uncertain economic times.”

For existing homeowners, Ms Haine said the outlook is “less rosy”. She said: “Even if the BoE pauses its tightening cycle again, a headline interest rate of 5.25 percent is still sky-high in comparison to the lows experienced just two years ago.

“Many people emerging from the cheap deals they secured before the tightening cycle are still facing a significant jump in repayments. With most borrowers on fixed-rate mortgages, the drag from high interest rates will continue to have repercussions for mortgage lending – and possibly the property market – for some time to come.”

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Bank of England Base Rate graphic

The Bank of England decided to hold the Base Rate at 5.25 percent in September (Image: EXPRESS)

However, some analysts suggest it may be beneficial to reduce the Base Rate by at least 0.25 percent rather than pause it or raise it again on Thursday.

Writing to his 27,000 followers on X, formerly known as Twitter, Julian Jessop, an economics fellow at the Institute of Economic Affairs, said: “Almost all the talk ahead of this week’s Bank of England decision has been about whether the #MPC will raise interest rates again. In contrast, my vote would be for an immediate ¼% cut (to 5%).

“Just as importantly, I’d also vote to pause ‘quantitative tightening (‘#QT’, or the process of selling back the government bonds that the central bank bought under ‘QE’).” (sic)

Listing his three main reasons for this, Mr Jessop wrote: “1. both GDP growth and #inflation have been weaker than the Bank had expected.

“2. the Bank was already forecasting that inflation would fall below the 2% target in the medium term if rates stayed at 5¼% and above all.

“3. money and credit growth have collapsed, which tells you far more about where inflation is heading than the backwards-looking data on prices or wages.”

He added: “I’d add that I wouldn’t have voted to raise rates at the August meeting (the last increase), so consistency would also require me to vote to reverse that move now.” (sic)

Do you think the Bank of England should pause, raise or reduce the Base Rate? Have your say in the comment section.

The Bank of England will announce its decision on whether to change the Base Rate on Thursday, November 2 at 12pm.





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RBI Flags Iran War Impact On Indian Economy; Sees El Nino Pushing Inflation

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April 22, 2026

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The Reserve Bank of India has cautioned around the ongoing US-Iran war and its impact on the Indian economy, stating that it will adversely affect growth going ahead and push inflation upwards. 

“Higher input costs associated with increase in energy prices and international freight and insurance costs along with supply-chain disruptions could constrain availability of key inputs for downstream sectors, thus impairing growth,” according the minutes of the RBI’s Monetary Policy Committee meeting released on Wednesday.

Along with this, elevated energy and other commodity prices coupled with supply shock due to disruptions in the Strait of Hormuz would act as a drag on domestic production in 2026-27, the RBI stated. The central bank added that amid the Iran war, it would be prudent to wait and watch before taking decisive action.

As far as supply shocks are concerned, another cloud hanging over the Indian economy is the potential disruption caused by weather phenomenon El Niño, which could have a negative impact on Southwest Monsoon. 

“Weather-related events – El Niño disturbances – pose downside risks to the domestic growth outlook, and an upside risk for the inflation trajectory,” MPC member Ram Singh said.

ALSO READ: Weak Monsoon Ahead? IMD Flags El Nino Risk For 2026 Season, Expects 92% Rainfall

El Niño is a natural climate phenomenon which occurs every two to seven years and is characterised by higher-than-average temperatures in central and eastern tropical Pacific Ocean. This impacts the Southwest Monsoon, leading to reduced rainfall during the June-September period in India. Generally, rainfall dependent sectors of the economy such as agriculture become more vulnerable in such conditions. 

While the El Niño is expected to hit the agriculture sector the hardest, the Gulf conflict has affected the Indian economy through several channels.

Considering the global and climate cues, the RBI revised its consumer price index-based inflation outlook upwards to 4.6% for FY27. At the same time, the central bank also pointed out that it maintains a cautiously positive outlook for India’s growth in the financial year. 

The RBI underscored that while the direction of impacts of the West Asia conflict and El Niño disturbances on growth and inflation is clear, how long they last will determine the quantum of said impact. 

MPC Keeps Rates Unchanged

The RBI on April 8 kept interest rates unchanged and reaffirmed its neutral policy stance, while signalling confidence in the country’s growth momentum even as it warned of rising global risks to inflation, liquidity and financial stability.

The MPC unanimously voted to retain the repo rate at 5.25%, in line with market expectations. The Standing Deposit Facility (SDF) rate remains at 5%, while the Marginal Standing Facility (MSF) rate was kept unchanged at 5.5%.

ALSO READ: RBI MPC Key Highlights: Rates, Stance Unchanged But A Warning On Inflation

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US Issues Travel Advisory For Citizens As Airspace Partially Reopens

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April 22, 2026

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The United States government on Wednesday issued an urgent security alert for American citizens inside Iran, urging them to leave the country immediately as Iran’s airspace partially reopened following weeks of conflict between the two nations.

The advisory, posted by the US State Department’s official travel account on Wednesday evening, said, “US citizens should leave Iran now, monitor local media for updates, and consult with commercial carriers for additional information on flights out of Iran.”

ALSO READ: Mid-Air Accident: South Korea Probe Finds Jets Collided As Pilots Took Photos During Flight

The alert, issued as Iran’s airspace reopened partially on April 21 after being closed during the active phase of the US-Iran war, outlined multiple exit routes available to Americans still in the country. 

“Americans seeking to depart Iran may also depart by land to Armenia, Azerbaijan, Türkiye, and Turkmenistan,” the advisory stated, while adding a critical warning, “US citizens should not travel to Afghanistan, Iraq, or the Pakistan-Iran border area.”

The advisory also flagged the risk of deliberate obstruction by Iranian authorities. “Be aware that the Iranian government may prevent US citizens from departing or charge an ‘exit fee’ for departures from Iran,” it warned.

In a specific note for dual nationals, the alert stated that “US-Iranian dual nationals must exit Iran on Iranian passports.”

The advisory comes at a volatile moment in the US-Iran standoff. 

A two-week ceasefire, which had been set to expire Wednesday, was extended by US President Trump at the request of Pakistani mediators — though the US naval blockade of Iranian ports remains firmly in place. 

Meanwhile, peace talks in Islamabad remain stalled, with allegedly Iran’s civilian and military leadership sharply divided over whether to engage with Washington’s conditions.

ALSO READ: Trump Offering Iran 3 To 5 Days To Respond On Peace Talks Amid Extended Ceasefire Deadline: Report

The partial reopening of Iranian airspace signals a fragile easing of hostilities, but US officials have made clear the situation remains deeply uncertain. 

With US Vice President JD Vance’s planned trip to Islamabad for a second round of peace talks postponed indefinitely and Tehran refusing to formally commit to negotiations, American citizens on the ground in Iran face an unpredictable and potentially dangerous environment.

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Govt Mulls Crackdown On Polymarket, Kalshi, Other Prediction Market Apps As Election Betting Spikes

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April 22, 2026

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Prediction market apps such as Kalshi, Polymarket have come under the lens of Ministry of Electronics and Information Technology of India MeitY’s scanner. 

Platforms such as Kalshi, Polymarket are used for betting on election outcomes, IPL and many other events, and MeitY is currently mulling action against these apps. 

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