The Bank of England’s decision to hold interest rates at 4% yesterday has prompted a mixed reaction from estate agents and property professionals.
The Bank’s Monetary Policy Committee voted 5-4 in favour of holding the rate at 4.0%, with four members actually backing a cut to 3.75%.
Nick Leeming, chairman of Jackson-Stops, said this might have been an opportunity missed by the Bank of England’s rate setting committee, in which a 25 basis points drop would have given the lending market a much-needed boost during this November lull.
He said: “If Budget tax rises harm growth, we may see interest rates cuts being used in the future to support greater market movement.
“Earlier this week lenders hedged their bets on a rate cut, with Nationwide reducing mortgage rates by up to 0.25 percentage points, offering the lowest two-year fixed rate since 2022. Moves such as this will be welcome by the mortgaged majority, with the hope they won’t be short lived. Some mortgage rates remain more than double the level they were before the pandemic, with house prices rising 26% during the same period.
“The slow pace of building is also a concern, with chronic undersupply keeping house prices high. Inflated costs and interest rates are impacting growth in the development sector, especially SMEs, leaving Government targets unmet. Greater financial headroom may have been a welcome boost to those struggling to make the numbers work.”
Iain McKenzie, chief executive of The Guild of Property Professionals, said: “The Bank of England’s decision to hold the base rate at 4% reflects a pragmatic balance between encouraging stability and maintaining downward pressure on inflation. While inflation remains above target, the latest data suggests we’re on a steady path toward more sustainable levels. From a housing market perspective, this pause reinforces cautious confidence, buyers and sellers are re-engaging, underpinned by genuine needs rather than speculation.
Jason Tebb, president of OnTheMarket, suggested this will be disappointing news for those borrowers who had hoped for a rate cut this time around, but it may mean the next reduction is not too far off.
He said: “Five rate reductions since August 2024 have been hugely welcomed by buyers and sellers alike, boosting confidence, easing affordability and giving much-needed impetus to the market, particularly since the stamp duty concession ended.
“Whatever the Budget brings later this month, once the atmosphere of uncertainty has lifted there may still be an opportunity for the Bank to reduce rates before the end of the year, delivering a real pre-Christmas boost for the housing market.”
Nathan Emerson, chief executive of Propertymark, added: “Following four rate cuts since August 2024, today’s decision to hold interest rates reflects the Bank of England’s cautious approach in an uncertain economic climate. Stability can be reassuring for the housing market, giving buyers and sellers a clearer sense of direction after months of volatility.
“However, for many, affordability remains stretched, and the market would benefit from further easing when conditions allow. Sustained rate stability or a gentle reduction in the months ahead would help bolster consumer confidence and keep transactions moving.”
Source: Estate Agent Today
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