The Bank of England has left interest rates unchanged at 3.75%, extending the current pause in monetary policy as policymakers continue to balance inflation risks against a weakening economic backdrop.
The decision, which had been widely anticipated by financial markets, marks the fourth consecutive meeting at which the Bank Rate has been held steady. The move means mortgage borrowers, homebuyers and property professionals will see no immediate change to the cost of borrowing.
The Monetary Policy Committee opted to keep rates on hold as inflation remains above the Bank’s 2% target, although recent data has been less severe than many economists feared following heightened geopolitical tensions and concerns over the impact of the conflict involving the US, Israel and Iran on global energy prices and economic growth.
For the housing market, the decision provides a degree of stability at a time when transaction levels remain subdued and affordability continues to weigh on buyer activity. Attention will now turn to whether easing inflationary pressures create scope for further rate cuts later this year.
Industry reaction:
Mark Manning, managing director of Northern Estate Agencies Group:
“The property market across the north has remained remarkably resilient despite higher borrowing costs, cost of living pressures and wider geopolitical uncertainty experienced over the past few years.
“Although buyer confidence isn’t quite where it was when borrowing costs were considerably lower, buyers are still out there and still want to purchase when a property and its price are right. This rate hold should provide a degree of reassurance, particularly for those trying to plan their next move, but it is unlikely to change sentiment overnight. The outlook will continue to depend on inflation and the wider economy, but despite significant headwinds the market has faced over the past few years, it has continued to show stability, which buyers and sellers should find reassuring.”
Matt Smith, Rightmove’s mortgage spokesperson: “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%.
“However, borrowing costs are still higher than many buyers have been used to, and remain a key factor shaping market behaviour. Our latest House Price Index shows that asking prices have dipped this month, with sellers responding to more price-sensitive buyers and increased competition.”
This article is currently being updated.
Read the orginal article: https://propertyindustryeye.com/property-industry-reacts-to-bank-of-englands-interest-rate-decision-8/
