Bank of England rate-setters have held interest rates at 3.75% for the fourth consecutive time today.

It was widely expected that ‘a hold’ would be their call again this time around, especially as inflation remains stubbornly above the Bank’s 2% target.

At 2.8%, the inflation rate is at least lower than in previous months, easing any pressure on the Bank’s Monetary Policy Committee (MPC) to consider a rate rise.

Confidence undermined

But many in the property industry had hoped for a cut in the Bank Rate, with the housing market stuttering along, and in need of a spark to fire up the engines.

War in the Middle East, albeit with a tentative peace deal in place, has undermined confidence with buyers and sellers hesitant.

And optimism at the beginning of the year that there might have been one or two Bank Bank Rate reductions by now, has been replaced with more caution.

The MPC meets again at the end of July and again in September, with some hopes there might be a small cut or two before the end of the year.

Industry reaction

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “In making this decision, the Bank must weigh up whether to potentially compromise a slowing economy, including the jobs and housing market, in order to reduce the chances of inflation getting out of hand.

“We know how important the housing market is to the overall strength of the economy, bearing in mind the knock-on effects on so many other businesses. An increase in rates now would further reduce confidence and activity.

“With CPI inflation holding steady at present, the pressure is off a little from the Bank for an early increase, even if it means one will come a little later in the year.”

Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “It was expected that base rate would be held at 3.75 per cent for another month, with the Bank of England treading carefully despite inflationary pressures.

“This decision will improve the general mood of buyers, which is still very cautious.

“People are paying close attention to the situation in the Middle East and its effect on energy prices.

“There are recent signs of improvement in outlook and activity, but it still feels hesitant.”

Joshua Elash, Founding Director of specialist lender MT Finance, says: “It is encouraging that the MPC has held base rate. This was the right thing to do.

“To increase it at this point could have put further strain on both lenders and borrowers.

“With a framework for peace in place between Iran and the US, we should see some stability return to the mortgage market, as well as an easing in tensions around energy costs.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, says:  “An increase in base rate was always possible at this meeting but never looked likely. While there are inflationary concerns, and expectations that prices will rise further – with May’s hold at 2.8 per cent coming as a welcome surprise – there are other factors to consider. Concerns for the labour market and wider economy have to be factored in, as well as secondary effects caused by the Middle East conflict.

“However, while seven members voted for a hold in base rate at 3.75 per cent, two members favoured a quarter-point increase to 4 per cent this time around.

“A steady hand on the tiller, rather than a knee-jerk reaction to raising rates, is vital for overall market stability and confidence, which is why we welcome today’s decision.

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