The Bank of England has kept interest rates at 3.75% following its latest Monetary Policy Committee meeting, leaving borrowing costs unchanged.
The decision comes as policymakers weigh inflation against a more uncertain economic outlook, with recent geopolitical tensions, including the war in Iran, contributing to market volatility and higher oil prices.
Prior to the conflict, some analysts had expected a rate cut, particularly after inflation fell to 3% in January and the Bank rate reached its lowest level since February 2023. However, expectations have shifted, with economists now less certain about the timing of any cuts and some raising the possibility of further increases if economic pressures persist.
Industry reaction:
Amy Reynolds, head of sales at Antony Roberts: “Markets were widely expecting a hold in base rate today, but the tone of the announcement is just as important as the decision itself. Stability and clear guidance will be key in reassuring both lenders and borrowers after a period of heightened volatility driven by global events.
“Across the property market, while both buyers and sellers are naturally discussing the evolving situation in the Middle East, we are not currently seeing a material impact on pricing or transaction levels. Although the recent uptick in mortgage rates is unlikely to be welcomed, demand remains resilient, particularly for well-priced, high-quality homes.
“Many movers delayed decisions last year amid uncertainty around the Autumn Budget and the policy direction of the Labour Party, and there is still a clear underlying need to move. As a result, for the right property, committed buyers are continuing to proceed with confidence.”
Matt Smith, mortgage commentator at Rightmove: “Today’s decision to hold the Bank Rate was widely expected, and for most homeowners and home‑buyers, there’s no immediate change to worry about. For those looking to secure a new mortgage rate or coming up to remortgage, even small rises in rates can have a real impact on monthly budgets, and lenders are very aware of that.
“Recent geopolitical uncertainty has made financial markets more volatile. That volatility feeds into swap rates, which are the underlying costs lenders use to price fixed‑rate mortgages. As a result, some mortgage rates have nudged up slightly this week, even though the Bank Rate itself hasn’t changed.
“Lenders are being understandably cautious in this environment. Some are quicker than others to adjust rates, which can lead to uneven changes across the market.
“These recent rises are understandably concerning for anyone preparing to take out a new mortgage or remortgage. Even a small increase can make a real difference to how a monthly budget feels. For context, the average monthly mortgage payment on a new purchase has increased by around £45 so far, but is still around £70 lower than it would have been at this time last year.
“This is an unfortunate but expected pattern in the way mortgage pricing moves when markets are unsettled. For now, the Bank Rate remains stable, mortgage rates remain significantly lower than the peaks seen last year, and there continues to be strong competition among lenders – even if some buyers choose to pause while the picture settles.”
Nathan Emerson, CEO of Propertymark: “The decision to keep base rates on hold provides a welcome sense of stability for the property market. Mortgage repayments remain predictable, which is critical for households balancing cost-of-living pressures. Stability in interest rates can support continued buyer confidence and property transactions, particularly in a market already facing supply constraints and rising house prices. For sellers and landlords, this environment allows for measured planning, while buyers can explore financing options without the immediate concern of rising borrowing costs.”
Jason Tebb, president of OnTheMarket: “As expected, the Bank of England held interest rates at 3.75% for another month. Although inflation fell to 3% in the year to January, since then the conflict in the Middle East, rising energy costs and fears that this will fuel inflation have created a more cautious ‘wait and see’ approach, with a unanimous vote from the nine members to hold base rate.
Interest rate cuts have proven to be hugely important for the housing market over the past few months, providing impetus and enabling buyers and sellers to plan ahead with more confidence. Six interest rate reductions since August 2024 have significantly improved buyer affordability and there will be understandable disappointment at the lack of another cut this month.
With lenders pulling mortgage products and repricing upwards in recent days to reflect higher Swap rates and maintain service levels, there is a degree of uncertainty and volatility. That said, people need to move, particularly those who may have delayed due to prolonged speculation surrounding last autumn’s Budget, and they are proceeding with their transactions.”
Kevin Shaw, national sales managing director, LRG: “The Bank of England sitting on its hands today will not come as any great surprise. Only a few weeks ago, a cut looked quite likely, but the renewed instability in the Middle East and the inflationary shadow cast by higher oil prices have clearly made Threadneedle Street a little more cautious.
“That said, the housing market has so far shown a fairly British talent for keeping calm and carrying on. We are not seeing the conflict translate into any meaningful slowdown in agreed sales or new listings, and our application levels from would-be buyers are up 9% on 2025. For all the noise around inflation and geopolitics, plenty of people still want to move and, crucially, are willing to get deals done. The market remains price sensitive, as it has for the past two years, but demand is clearly present.
“I view new sales agreed as the “canary in the coalmine” – they are usually the first thing to drop off if confidence really starts to crack. So far, that canary is still singing.
“Of course, a rate cut would have been welcome. Buyers always prefer a tailwind to a headwind. But one hold does not redraw the map. With six MPC meetings still to come this year, there is still every chance of rates easing later in 2026, and a move on 30 April would be warmly received.
“In the meantime, the property market looks less rattled than some of the commentary around it. The Bank may have delayed its long term objective of reducing interest rates, but from our perspective buyers and sellers are not delaying in their willingness to transact.”
Nicholas Mendes, mortgage technical manager at John Charcol: “A hold at 3.75% does not come as a surprise. It reflects a Bank of England that has been forced into a more cautious stance by events over the past few weeks.”Before the recent escalation in the Middle East, another cut looked increasingly likely. Inflation had been moving in the right direction, wage growth was easing, and the labour market had softened enough to support the case for a further reduction. That backdrop has changed.
“The rise in oil and energy prices has created a fresh inflation risk the Bank will not want to wave through. Monetary policy cannot stop an external supply shock, but it can try to stop it feeding into inflation expectations and broader pricing across the economy.
“A hold therefore should not be read as a change in long-term direction. It looks more like a pause while policymakers judge whether this is a short-lived disruption or something that starts to embed itself more widely.”
Simon Bailey, head of auctions at Bidx1: “Any talk of rate cuts tends to inject a bit of optimism into the property market, and we usually see that translate into more bidders and stronger competition at auction. Rates being held is unlikely to derail the market, but it may mean things tick along rather than getting the boost many had hoped for.”
Joshua Elash, director of MT Finance: “Set against the dramatic backdrop of the conflict in Iran, this was the only expected outcome. It’s time to hold. This should be a brief measure.
“It is expected that visibility on a successful conclusion to the conflict with Iran will ease concerns on the impact rising energy costs are going to have on inflation. Only then would we expect the MPC to resume its previous course of gradual reductions to the base rate.”
Read the orginal article: https://propertyindustryeye.com/breaking-property-industry-reacts-to-bank-of-englands-interest-rate-decision-2/?utm_source=rss&utm_medium=rss&utm_campaign=breaking-property-industry-reacts-to-bank-of-englands-interest-rate-decision-2
