Bank of England’s decision not to change interest rates
Following on from the Bank of England’s decision not to change interest rates, here are some thoughts from the Industry.
Kevin Shaw, National Sales Managing Director, LRG:
After a reduction in August, the decision not to reduce interest rates further in September was what we’d expected.
The impact of August’s cut has had the desired effect of changing sentiment towards affordability and at LRG we’ve seen a very positive revival in the last month. Instructions (supply) and applicant levels (demand) are both up year-on-year (11% and 7% respectively) and this has had a significant impact on sales – which are up 27% year-on-year across the LRG brands.
The Government’s, and the Bank’s, stated aim is to bring interest rates down further this year, and so we hope to see the second drop of the year at the next Monetary Policy Committee on 7 November and perhaps one further reduction before Christmas.
We need more than a single reduction of 0.25% to reestablish confidence across the market. Specifically we face the considerable ‘known unknown’ of the Budget on 30 October. We know that Capital Gains Tax and Inheritance Tax are likely to rise. But we’ve known this for some time and people have planned accordingly. The big questions surround Stamp Duty and other taxes, of which little is known.
A further reduction would bring a substantial benefit to the market – which, as the Government identifies – is crucial to the economic prosperity of the country.
Robin Rathore, CEO, Bamboo Auctions:
“With inflation remaining steady, the Bank of England is sensible to hold interest rates this month.
“The news will be disappointing for many aspiring homeowners that were hoping the rates will nudge down, but those looking to move need to remember that a mortgage is still one of the cheapest ways to borrow money.
“September is a particularly busy month for selling property so this could be the perfect opportunity to find your dream home. If you buy through auction, you could also still be in before Christmas!”
Nathan Emerson, CEO of Propertymark:
“Since the initial rate cut a few months ago, many people will have been closely awaiting any further anticipated cuts, however, it remains crucial the Bank of England continue to implement cuts in a controlled and functional manner, as not to fast reverse the economic progress so far.
“Bearing in mind yesterday’s figures regarding inflation, it is understandable why the decision to hold the base at current levels has been employed. Propertymark remains keen to see full consistency within the wider economy and for any eventual base rate cuts to create a pathway for people that provides long-term stability, confidence and affordability.”
Stephanie Daley, Director of Partnerships at Alexander Hall:
“The Bank of England’s decision to hold interest rates steady provides stability for homebuyers and those looking to remortgage, especially with the sub 4% mortgage rates we are now seeing for 2- and 5-year fixed terms. As we approach the two-year anniversary of the Liz Truss mini-budget, this decision offers a sense of predictability, allowing the market to maintain its positive outlook for the remainder of the year. September has already been an incredibly busy month, with strong confidence from homebuyers, and keeping rates unchanged should help sustain this momentum, encouraging continued activity in the property market.”
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