Industry reacts to Bank of England’s interest rate decision

Industry reacts to Bank of England’s interest rate decision


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The Bank of England has held base rate at 4.75%.

The Bank’s monetary policy committee was split – six votes to hold, three to reduce the rate. And in a statement issued this afternoon, it says it stands by its forecast of gradual cuts in the rate in the future.

Nathan Emerson, CEO of Propertymark, comments: “With many national and international factors continuing to shape the global economy, the Bank of England is understandably taking a cautious path until they can be confident that they are able to safely reduce interest rates back. It has been encouraging to see interest rates reduced across recent months, but the base rate can only be reduced if all factors allow. 

“High interest rates can of course affect borrowing for many people, especially those stepping onto the housing ladder, but it’s important there is sensible balance to keep the overall economy secure and workable for all.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The lack of movement in base rate is not surprising given recent increases in inflation and wages as the Bank of England wants to see some stability before taking what it thinks is risks with the economy.

“However, as far as the property market is concerned, even a small cut in base rate would be welcome not just for those on fixed-rate mortgages who are facing considerable increases in their loans when they come to remortgage but also first-time buyers who are the engine of the market, wanting to escape from high rental levels and take advantage of reduction in stamp duty before 1st April.

“A reduction in mortgage rates is always helpful as it improves activity, which is good not just for those contemplating moving but for the wider economy.”

Matt Smith, Rightmove’s mortgage expert says: “While not the early Christmas present that many would have wanted, it was widely anticipated, and must be considered against a backdrop of inflation being at the top end of forecasts, and wages have increased at a higher rate than expected.

“We don’t expect any reductions in mortgage rates over the next few weeks, but as we progress into 2025, lenders are likely to look at ways to take advantage of increased demand as the busier home-buying season starts. As we move towards the end of the Stamp Duty reduction, lenders are also likely to look at reducing rates wherever possible

“Next year, three Bank Rate cuts are currently planned rather than the four anticipated just a few weeks ago, highlighting how quickly things can change in the market. We predict average mortgage rates could trickle slowly down towards around 4.0% next year, though this is dependant on the impact of a wide variety of unpredictable factors, including geo-political tensions and inflation.”

Nick Leeming, Chairman of Jackson-Stops, comments: “Today’s decision reflects the ongoing challenge of balancing accelerated pay growth with persistent inflation. This cautious approach is understandable as the Bank seeks more clarity and fiscal headroom before considering a reduction in rates. Rates rise much quicker than they fall but the Bank of England must avoid cutting too soon and undermining the progress being made on inflation. 

“The macroeconomic environment remains complex, with the Autumn Budget introducing tougher measures for businesses, potentially leading to higher costs for consumers. However, the Bank’s decision to hold rates steady provides a degree of stability, which is crucial for both the economy and the property market.

“For the property sector, mortgage customers will continue to carefully evaluate their financial options and long-term plans. Stability in government and economic growth is essential to bolster buyer confidence, which in turn can drive increased sales and completions. As we look ahead, a steady economic footing will be key to enabling the Bank of England to gradually reduce rates.

“Across the Jackson-Stops network we expect house prices to remain on par with 2024 and for Q1 to be particularly active as buyers strive to complete transactions before the end of current Stamp Duty incentives.

“While the immediate impact of the rate decision may be mixed, the longer-term outlook remains cautiously optimistic. A stable economic environment will ultimately support a healthier property market, benefiting both buyers and sellers.”

Simon Gammon, Managing Partner, Knight Frank Finance, adds: “The decision ensures that lenders will hold mortgage rates largely steady until the new year, but even then, there is little room for more rate cuts until we see a meaningful shift in the inflation narrative.

“For now, at least, it looks like 2025 will be a quieter year in the mortgage market. Pricing in financial markets suggest we could see as few as two cuts to the base rate before the end of the year due to persistent wage growth that is incompatible with inflation remaining at the Bank of England’s 2% target. That said, the past year has shown us how quickly conditions can change – potential tariffs set by incoming US president Donald Trump may introduce a new bout of volatility to global borrowing costs.”

Tags: Finance

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