Bank of England interest rates decision: industry reacts
Interest rates have been held at 3.75%.
The Bank of England’s Monetary Policy Committee decided to hold interest rates at 3.75% today, amid continuing Middle East tensions and political uncertainty.
Six members of the Committee voted for a hold while three favoured a quarter-point increase to 4%.
It means the cost of borrowing may not drop any time soon, so mortgage rates for homebuyers could remain high.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The recent fall in inflation has given the Bank of England some respite from cost-of-living pressures which have been building since resumption of the Iran War hostilities, and explains this hold.
“However, the relief is likely to prove short-lived as the impact of oil, energy and other prices will probably prove harder to manage when the next decision-time for rates comes around.
“The level of interest rates is so crucial, particularly at the moment, to maintaining activity, not just in the price-sensitive housing market but across the wider economy where stability is key.”
Nathan Emerson, Chief Executive at Propertymark, says: “By holding interest rates, the Bank of England has opted for a measured approach as inflation remains above its 2 per cent target. While price pressures have eased in recent months, today’s decision reflects the need to ensure inflation continues moving in the right direction before further policy changes are considered.
“A stable base rate provides greater certainty for the housing market. It gives lenders more confidence to continue offering competitive mortgage products while allowing buyers to make informed financial decisions. Savers also continue to benefit from relatively attractive returns on savings, helping some prospective homeowners build towards a deposit.
“However, inflationary pressures have not disappeared. Higher household costs, including July’s increase in the energy price cap, alongside ongoing uncertainty in global energy markets, mean the Bank of England is likely to continue taking a cautious, data-led approach over the coming months.”
Nick Leeming, Chairman of Jackson-Stops, says: “Today’s decision to hold the Bank Rate avoids adding further immediate pressure on households and gives the housing market continued policy stability.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “For the property market, the practical read is that mortgage pricing had already moved ahead of the announcement – several major lenders raised rates last week – so today was unlikely to be the trigger for further movement, but the tone of the Monetary Policy Report could keep upward pressure on fixed-rate pricing into the autumn.
“What we need is lower rates, but I can’t see that happening in the short to medium term.
:In our offices, prices remain flat with sensible offers being accepted. There are more sellers than buyers, but sellers aren’t panicking – asking prices are coming down, but a lot of that is simply initial overpricing meeting the time it takes to find the market level. There’s definitely a point where owners simply won’t move at today’s numbers, and we’re seeing that more and more. It’s like a game of chicken – who moves first, the buyer or the seller?”
Jason Tebb, President of OnTheMarket, says: “While interest rate cuts are helpful in boosting buyer and seller confidence, this fifth consecutive base rate hold suggests a steadiness and stability which is no less welcome, particularly as we welcome another new Prime Minister.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “While there was always a possibility that the Monetary Policy Committee would increase base rate this month given the spike in energy prices, it is no real surprise that it has voted to hold it again at 3.75 per cent.
“Inflationary concerns remain and the expectation is that prices will rise further. While June’s fall in inflation to 2.6 per cent came as a welcome surprise, there are other factors to consider. Concerns for the labour market and wider economy persist, as well as secondary effects caused by renewed hostilities in the Middle East.
“This time around, the vote split was 6-3 with three members favouring a quarter-point increase to 4 per cent compared with the two members who voted for a hike at the last meeting. Prevailing caution feels the right response for now, with a steady hand on the tiller rather than a knee-jerk reaction to raising rates, which is vital for overall market stability and confidence.
“Despite the rate hold, borrowers still have to contend with an upwards trajectory in mortgage pricing, with a number of lenders increasing rates on their two- and five-year fixes. Mortgages are more expensive than they were a month ago, so affordability concerns remain. Independent advice is more important than ever, as is securing a rate as soon as possible with the option of reviewing it before completion to see whether there is a better product available at that time.”
