The Bank of England has held the base interest rate at 4.5% following a vote by the Monetary Policy Committee (MPC), with eight members supporting the decision and one voting for a reduction to 4.25%. The decision comes amid ongoing concerns about inflation and economic uncertainty, leaving landlords and property investors weighing up their options.
Bank of England treads cautiously on rate cuts
Inflation remains a pressing concern, with January’s Consumer Prices Index (CPI) rising to 3% from 2.5% in December — still above the Bank’s 2% target. The Bank warned that CPI inflation is projected to climb further, potentially reaching 3.75% between July and September 2025.
Explaining the rationale behind its decision, the Committee stated: “Domestic price and wage pressures are moderating but remain somewhat elevated.” The statement also highlighted that while global energy prices have recently fallen, they remain higher than this time last year.
Nicholas Mendes, mortgage technical manager at John Charcol, described the decision as a move to maintain stability. “The Bank’s decision signals a preference to keep monetary policy steady until there is clearer evidence that inflation is easing sustainably,” he said. “With headline inflation rising to 3% in January and expected to climb further by summer, policymakers remain cautious about moving too soon and risking a reversal of progress in stabilising prices.”
Landlords urged to stay positive despite disappointment
While some property experts had hoped for a rate reduction, industry leaders encouraged landlords to focus on the market’s underlying resilience.
Alpa Bhakta, CEO of Butterfield Mortgages, acknowledged landlords’ concerns but highlighted positive signs. “While property investors were hoping for a rate cut, the economic climate and property investment outlook are in a much better position than in previous years,” she explained.
Bhakta also stressed the importance of flexibility during the current economic climate. “The upcoming Spring Budget and new tax year could influence market conditions and introduce some uncertainty. As such, it’s essential for lenders to stay proactive, supporting borrowers and brokers to ensure the market can capitalise on its strong start to the year.”
Ben Thompson, Deputy CEO of Mortgage Advice Bureau, offered reassurance to property owners, adding: “The Bank of England’s decision shouldn’t give prospective and current homebuyers much cause for concern. A small rise in inflation and a degree of global economic uncertainty calls for a cautious approach. Many people will no doubt feel a sense of relief that the Bank is playing it safe.”
Property sector urges policymakers to unlock growth
While many in the industry welcomed the decision to hold rates, others warned that ongoing economic caution could limit market growth.
Kevin Shaw, National Sales Managing Director at Leaders Romans Group (LRG), voiced disappointment at the decision. “Today’s decision by the Bank of England to hold interest rates was not a surprise, but it was a disappointment,” he remarked. Shaw argued that keeping rates high acts as a “handbrake on future growth,” particularly for landlords and property developers.
“The MPC was too slow to put rates up in 2022 and is increasingly looking too slow in reducing them now,” Shaw warned. “To seriously change things up — specifically in housing delivery — monetary policy must align with the government’s objectives.”
Robert Sadler, Vice President of Real Estate at Excellion Capital, shared similar concerns. “While property investors and financiers would’ve liked to see a cut, which would have definitely inspired a boost in industry activity, on balance the sector can afford to wait until May for this to happen,” he said.
