As widely predicted the Bank of England’s Monetary Policy Committee has decided to hold interest rates at 4.75%.
Money markets had bet on there being just an 8% chance of a rate cut at the final meeting of the Monetary Policy Committee this year.
Last month The Bank of England cut the base rate by 0.25% to 4.75% which marked the second rate cut since August when it was lowered from 5.25% to 5%. Prior to that, the BoE made 14 consecutive rate increases.
Commenting on today’s decision to hold the base rate CHL Mortgages commercial director Ross Turrell said: “The Bank of England’s rate cuts have injected much-needed positivity into the mortgage and property markets in recent months. But, with the CPI ticking up again yesterday and concerns lingering around the longer-term impact of the Autumn Budget on inflation in the UK, a rate cut today was always unlikely.
He added: “The news might trigger some negative responses, particularly among property buyers holding out hope for lower mortgage rates. However, Governor Bailey has strongly indicated that the base rate could be cut by 1% across the next 12 months, which will likely result in a significant surge in buyer demand and market activity in the new year. That is a promising outlook, and we must be ready as lenders to respond by engaging with brokers and their clients.”
Market Financial Solution chief executive Paresh Raja said: “The Bank of England has long urged against lowering interest rates too quickly, so following November’s decision to cut the base rate, it was always highly unlikely that the MPC would do the same today. But that should not be seen as a negative. Instead, we have to see the bigger picture and reflect on the progress we have seen across the property and lending markets in 2024.
“Yesterday’s data from the ONS underlined that house prices and rents are rising, while interest rates have started to fall and are expected to come down further next year. Meanwhile, from a political perspective, although new policies are creating challenges for landlords in the private rental sector, the fact that 2024 has brought in a new government with a sizeable parliamentary majority does bring stability after several years of turbulence.”
He added: “Put simply, the market is in a stronger position today than it was 12 months ago, and this lays the foundations for some exciting opportunities for lenders, brokers and property investors alike in 2025.”
My Mortgage Angel mortgage adviser Sam Lindsay said: “All signs are pointing towards the base rate coming down – but not just yet. With the rebound in inflation and unrest across the world, the Bank of England will wait for this to stabilise before cutting rates any further.
“However, this hold is just a temporary fix, and we expect to see some downwards movement in the first quarter of 2025, and then further incremental drops throughout the year.”
LiveMore managing director of capital markets Simon Webb commented: “No third time lucky this month for borrowers on SVRs, trackers or first-time-buyers hoping for a reduction in the Bank Rate again. After the increased borrowing announced in the Autumn Budget that set markets in a flurry, and November’s repeated rise in inflation, it’s no surprise that the MPC voted against a base rate drop – for now at least.”
