The Bank of England’s monetary policy committee has issued its latest base rate decision.
As expected, the rate has been held at 3.75%.
Prior to the outbreak of the Iran War, it was expected there would be rate cuts beginning this month.
Reaction to the ‘hold’ has been coming thick and fast from the industry.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Although it is likely interest rates will go up again before they start coming back down, the hold today is a nod to the inflationary pressures which are building due to the impact of war in the Middle East.
‘Certainly the Bank did not want to do anything which would compromise what little growth we have seen in the economy recently, which would clearly prove to be self-defeating.
“As far as the impact on the property market is concerned, the effects are likely to be fairly minimal although encouragingly we have noticed some mortgage costs starting to creep down again.
‘This will certainly help to improve confidence which remains at a relatively low ebb.”
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Kevin Shaw, national sales managing director of LRG (formerly Leaders Romans Group) says: “The important point is that the situation looks less fragile than a month ago. Assuming the Middle East situation does not escalate, today’s hold suggests some easing of concern around the path of rates for the rest of the year.
“The next Monetary Policy Committee meetings on 18 June and 30 July now become particularly significant. Much will depend on inflation, employment and whether global events continue to feed through into energy prices and household costs.
“The concern is that a rise later in June or July could coincide with the market entering its quieter summer season.”
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LSL Estate Agency Franchising’s managing director, Paul Hardy, sees it like this: “The vote in favour of holding interest rates offers a degree of short-term stability, which is welcome, however, it won’t materially shift the dial on buyer confidence or transaction levels overnight.
“Many prospective movers are still adjusting to a higher-than-expected-rate environment, and lenders remain cautious in how they price and assess risk.
If the Bank can maintain a steady path over the coming months, it will help hold up confidence among buyers and sellers alike. In the meantime, we work with the hand we are given and market activity remains robust for the moment.”
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Nathan Emerson, CEO at Propertymark, comments: “Considering current tensions worldwide, it is reassuring to see base rates held steady.
“For those on the property ladder or thinking of approaching the buying and selling process, today’s news brings a sense of relief across the coming months.
“However being realistic in sentiment, we currently sit in the middle of a sensitive situation where many households haven’t yet fully recovered from issues connected to the cost of living.
“While it may genuinely feel the pressure is still on regarding affordability, it is hoped as tensions de-escalate globally, we will proceed to a more confident footing which offers more robust levels of household affordability for consumers within the long-term journey of purchasing a property.”
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Joshua Elash, director of specialist lender MT Finance, comments: “Holding base rate at 3.75 per cent was the right thing to do in the current climate.
“The conflict in Iran has lasted longer than many expected and has already impacted inflation and energy prices. That the MPC continues to stand firm and not rush decisions is a good thing. This will hopefully provide some form of stability for lenders and borrowers alike.”
