Bank of England Maintains Rate at 5.25%, Experts Analyze Future Market Trends

The Bank of England has decided to keep its base interest rate steady at 5.25%, continuing the rate’s 15-year high into the early part of the new year. The Monetary Policy Committee was divided in its decision, with a 6-3 vote, where two members were in favor of an increase and one favored a cut.

Andrew Bailey, Governor of the Bank of England, and Chief Economist Huw Pill are believed to support maintaining the current rate.

Despite an unexpected inflation increase in December to 4% from 3.9%, most City analysts are of the opinion that inflation is on a downward trajectory, with predictions of reaching the government’s target of 2% by April.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, comments on the decision: “There were no bold moves in sight, just another hold from Bank of England policymakers. It’s hardly surprising that inaction is the order of the day, given that inflation ticked up in December. It hardly set the stage for an interest rate cut.” She emphasizes the significance of the Bank’s overall sentiment, not just the rate decision itself, and the potential for interest rate cuts later in the year.

Matt Smith, a mortgage expert at Rightmove, notes that the base rate stability indicates the Bank’s caution not to exceed rate rises, adding that the market appears more robust than last year.

Jason Tebb, President of OnTheMarket, expresses relief at the decision, strengthening expectations that rates have peaked and the next movement will be downward.

Jonathan Samuels, CEO of Octane Capital, observes that the Bank of England’s cautious approach seems to be paying off, with inflation falling sharply. He advises buyers to proceed with caution despite the positive outlook.

Guy Gittins, CEO at Foxtons, highlights the positive momentum carried into 2024, cautioning that mortgage rates might start to climb following the decision to maintain the base rate.

Verona Frankish, CEO of Yopa, suggests that while the decision won’t necessarily increase market positivity, it won’t diminish it either, indicating a likely peak in interest rates.

Marc von Grundherr, Director of Benham and Reeves, notes the strides forward in the property market since the rate hold, bringing certainty to buyers.

Ruth Beeton, Co-Founder of Home Sale Pack, mentions the sluggish property market, indicating the need for stimulation despite the marginal uptick in mortgage market activity.

Colby Short, Co-founder and CEO of GetAgent, sees the decision as stabilizing the market, with mortgage rates reducing and buyers returning.

Nathan Emerson, CEO at Propertymark, calls for government action to curb inflation and aid in reducing interest rates.

John Phillips, CEO of Spicerhaart and Just Mortgages, highlights the need for the Bank of England to be decisive, stressing the importance of continuity and stability.

Ben Thompson, Deputy CEO at Mortgage Advice Bureau, sees the hold as likely and believes it will boost market confidence in potential rate cuts later in the year.

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, comments on the market’s sensitivity and the anticipation surrounding future rate movements. He poses the question of whether the recent reduction in mortgage rates is just the beginning or if borrowers should wait longer before taking action.