The monetary policy committee of the Bank of England has released its latest interest rate decision.
It is keeping base rate on hold at 4%.
The decision was widely expected, particularly after disappointing figures from the wider economy released in recent days.
In response, Kevin Shaw – a managing director at LRG, formerly Leaders Romans Group – says: “GDP grew only very modestly in the second quarter, consumer price inflation (CPI) – as we saw yesterday – remains above target and the political backdrop is anything but stable. In such circumstances, it is far better to pause now than to cut rates only to raise them again in the months ahead.
“For the property market, consistency is more valuable than short-term shifts. After several years of turmoil, stability is welcome. At LRG we saw solid summer trading and our clients tell us that predictability in the market allows them to make decisions with greater confidence. A potentially troublesome Budget is looming in November. For this reason and others, the Bank of England must appear to be steering a steady course, especially if there is a risk of choppier waters are ahead.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, states: “Doggedly steep inflation at a 19-month high in particular has clearly made the Bank of England even more nervous about cutting base rate despite wage pressures easing.
“So what is the outcome for respective home buyers and sellers? More are likely to retreat further into their shells where they were already cowering in anticipation of budget tax rises. This is even more reason for sellers to recognise the importance of keen pricing and appreciate the first offer received may be the only one.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, adds: “This is okay, as it provides stability and is far preferable to a rate increase. However, a drop in rates is required to give a boost to affordability which remains a brake on the housing market. For a real impact, we need the next reduction to be a half-point cut, rather than a quarter point.
“Never in my 25 years in the industry have I had so many conversations with people about the cost of stamp duty. The high cost of moving is prohibiting many from taking the plunge; people want to move but don’t feel confident enough to do so, which is causing stagnation in the market in some areas.”
Nathan Emerson, chief executive of letting agents’ trade body Propertymark, comments: “ Any decision that the Bank of England makes regarding base rates will determine whether people can realistically afford to relocate, and the uncertainty about potential further Stamp Duty restructuring may impact those moving house in England and Northern Ireland,” he says.
“Though we have clarification that the Budget will take place on November 26, this may cause people to delay their next house move in the meantime.”
Gareth Lewis, deputy CEO of specialist lender MT Finance, sees it this way: “Today’s decision to maintain interest rates at 4 per cent comes as no surprise. By holding rates, the Monetary Policy Committee is demonstrating its commitment to continued vigilance with regard to inflationary pressures while providing a sense of stability for businesses and investors.
“For property investors, this decision may create a stronger demand for alternative financing solutions such as bridging loans. A measured approach is key, and we anticipate that a rate reduction is on the horizon as inflationary pressures continue to ease.”
Interest rates were reduced to 4% in August, down from 4.25%. The Bank of England’s monetary policy committee meets again in November and December.
