The Bank of England has held the base rate at 3.75%, as falling energy prices and lower-than-expected inflation helped reduce pressure for any further increase in borrowing costs.

The Monetary Policy Committee voted by seven votes to two to leave the bank rate unchanged.The decision follows a dramatic few weeks. The European Central Bank raised interest rates with a warning about the Gulf’s impact on inflation and the economy, increasing expectations that the Bank of England might follow suit.

Instead, UK inflation held steady at 2.8%, taking many economists by surprise after they had forecasted it to rise to 3%.

Shortly after, the US and Iran reached an agreement to reopen the Strait of Hormuz, which is a key route for global oil and gas supplies. Oil prices have since fallen back, easing concerns that higher energy costs could push inflation back up again.

It comes as welcome news for mortgage borrowers. Several lenders have cut selected fixed-rate deals, and further reductions are expected if inflation continues to ease.

The wider UK economy also remains weak, contracting by 0.1% in April, and the jobs market has shown signs of slowing, although this will reduce the likelihood of rate rises.

Below is a selection of this month’s best buys from Moneyfacts.co.uk (remortgages):

Two-year fixed rates: 4.61% from Nationwide BS. Product fee £999. 60% LTV.
4.64% from first direct. Product fee £490. 60% LTV.

Five-year fixed rates: 4.64% from Nationwide BS. Product fee £999. 60% LTV.
4.70% from first direct. Product fee £490. 60% LTV.

Discounted variable: 4.09% From Ecology BS for 2 years. Product fee £0. 80% LTV.br> 4.24% From Bath BS For 2 years. Product fee £999. 80% LTV.

BUY-TO-LET (BTL)

Best two-year fixed rate: 4.81% from HSBC. No product fee. 60% LTV.

Five-year fixed rate: 4.58% from Birmingham Midshires. Arrangement 1.00% Advance. 65% LTV.

Best Discounted variable: 4.89% For 5 years. From Newbury BS. Arrangement £950. 75% LTV.

The information we provide is our personal opinion and should not be relied upon for financial advice. Should you need financial advice or guidance please contact an appropriate professional.