By: Sarah Williams

The emergence of the latest Coronavirus Variant “Omicron” has sent markets tumbling and decreased the likelihood of a base rate rise in December.

The Bank of England backed away from a rise in interest rates in November, leaving the central bank’s benchmark at the historic low of 0.1% rather than the heavy speculated rise to 0.25%, even though it published its highest inflation forecast for a decade. A February rate rise is now projected, which is a dramatic turnaround for interest rate markets, which were expecting a rate rise at the beginning of this month.

Laith Khalaf, head of investment analysis at AJ Bell, said: “The Omicron variant has punctured expectations of a Christmas rate hike, with February now emerging as the frontrunner to stage the much anticipated tightening of UK monetary policy. Markets had really got ahead of themselves in so confidently predicting a 2021 rate rise, no doubt egged on by some hawkish rhetoric from the Governor of the Bank of England. But it was always going to be risky for the Bank to raise rates this year, with the heightened chance of a resurgence in the pandemic over the winter months, and employment data beyond the furlough scheme only just becoming available.

December may be the perfect time now to review your mortgage before the projected BOE rate rise in February. “Reviewing your Mortgage is crucial in the present climate to ensure securing all-time low mortgage rates” said Jack Williams, Managing Director of Blossomfield Mortgages.