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.

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.

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.”

“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.”

Nick Leeming, Chairman of Jackson-Stops, says: “The Bank of England’s decision to hold interest rates will be welcomed by many buyers and homeowners who have spent recent months navigating an increasingly uncertain economic landscape.

“While borrowing costs remain significantly higher than the levels seen in recent years, today’s decision provides a degree of consistency at a time when households and businesses continue to face wider economic pressures.”

Nathan Emerson, CEO at Propertymark, says: “With inflation still above the Bank of England’s 2 per cent target, a decision to hold interest rates at their current level reflects a cautious and balanced approach.

“Policymakers will be keen to ensure inflationary pressures continue to ease before making any significant changes to borrowing costs.

“For homeowners, buyers and sellers, today’s decision provides a degree of stability and certainty. While borrowing remains relatively expensive compared with recent years, holding rates steady avoids adding further pressure to household budgets and gives the housing market an opportunity to adjust.”

Simon Gammon, Managing Partner at Knight Frank Finance, says: “The Bank of England’s decision to hold rates, combined with weak pay growth and lower-than-expected inflation, will pave the way for mortgage lenders to cut rates over the coming weeks.

“The repricing began earlier this week when Nationwide reduced its headline two-year fixed rate to 4.29%, which is now the cheapest fixed rate on the high street.”

James Stevenson, Managing Director of Sales for Foxtons, says: “Today’s decision was widely expected and reflects continued caution from the Bank of England as it balances the need to support economic growth against lingering inflationary pressures.

“Whilst rates may not have fallen at the pace many anticipated, the UK property market has remained remarkably resilient, with values holding up well compared to this time last year.

We’re seeing a market of committed buyers. The people getting in touch are serious, well-researched and ready to move. For anyone waiting for the perfect rate climate, the wait carries its own risk.”

Verona Frankish, CEO at Yopa, says: “Today’s decision to hold the base rate comes as little surprise and, importantly, it provides a further period of stability for homebuyers and sellers alike.

“The property market has demonstrated remarkable resilience so far this year, with buyers continuing to transact despite higher borrowing costs than many had become accustomed to prior to 202,” she says.

“Whilst a rate cut would undoubtedly have provided an additional boost to sentiment, consistency and predictability remain valuable in their own right.”

Jonathan Samuels, CEO of Octane Capital, says: “Another hold was the overwhelming expectation and the Bank of England has once again opted for caution over commitment.

“Whilst inflation has eased considerably from its peak, policymakers remain mindful of the risks associated with moving too quickly and today’s decision reflects that balancing act.

“The challenge now is less about the direction of travel and more about the pace.”

Chris Hodgkinson, Managing Director of House Buyer Bureau, says: “Today’s decision is unlikely to come as a disappointment given that a hold was already widely anticipated, but neither will it provide much of a catalyst for those waiting on the sidelines.

“The housing market has continued to function despite elevated borrowing costs, however many buyers and sellers remain highly sensitive to affordability and are looking for stronger signals that mortgage rates will ease further over the months ahead.”

Matt Smith, Head of Mortgages at Rightmove, says: “Today’s decision to hold the Base Rate will give some welcome short-term certainty to movers, and some recent easing in geopolitical tensions has helped to improve market sentiment, though the outlook remains sensitive to global events.

“There is now more limited pressure for mortgage rates to increase, and we may see lenders continue to gradually reduce rates in the coming weeks if this stability continues, with the average two-year fixed rate currently just above 5%.”

Jason Tebb, President of OnTheMarket, says: “With inflation holding firm at 2.8 per cent in the 12 months to May, this took a bit of pressure off the rate setters who chose to continue with their ‘wait and see’ approach, although two members voted for a quarter-point increase this time around.

“Although inflation is still above the Bank’s 2 per cent target, and is expected to edge higher on the back of inflationary pressures created by the Middle East conflict before it comes down, the Bank has to balance that risk with avoiding squeezing businesses and consumers who have already been hit by a rise in energy prices.”

Iain McKenzie, CEO at The Guild of Property Professionals, says: “The decision by the Monetary Policy Committee to hold Bank Rate at 3.75% was widely anticipated and reflects the careful balancing act facing policymakers.

“While inflation has remained higher than the Bank’s 2% target at 2.8%, it is encouraging that price growth did not accelerate between April and May.

“For the housing market, stability is key. Buyers and sellers have been navigating elevated borrowing costs and a more cautious economic backdrop, yet activity has remained resilient.”

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