The Bank of England’s monetary policy committee has announced its latest interest rate decision.
Despite some suggestions that a cut might be announced, the Bank has kept the rate at 4.0%.
In September, the Bank’s governor Andrew Bailey said he still expected further rate cuts, but the pace would be “more uncertain”.
Reaction to today’s announcement has flooded in from across the property sector.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “This time around the Bank had a more difficult decision to make than on previous occasions. Members of the interest-rate setting committee had to reconcile lower-than-expected inflation and wage growth with the likely impact of now-expected tax cuts in the Budget.
“The dangers of cutting rates further at this point could potentially reignite inflationary pressures which the Bank will be keen to avoid.
“As far as the housing market is concerned, activity has been in the doldrums for the past month or so since speculation about the Chancellor’s intentions intensified. However, the direction of travel for interest rates appears downwards which will give a boost to those sitting on the fence as well as others who are contemplating the end of fixed-rate mortgages at previously-agreed rock-bottom rates.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, comments: “While market expectations for a base rate cut had risen, the Bank of England has remained cautious and held it at 4% for now. Regardless of the decision made today, we’ve recently seen lenders introduce new products and policies aimed at higher-income borrowers and larger loans, which is encouraging for the London market – particularly in the Richmond Borough.
“Although many have spoken about a market where not much is going on, which meant we were expecting a very quiet November in the run-up to the Budget, that hasn’t been the case. We’ve agreed a high number of sales – mainly freehold homes – with prices reaching up to £2.5 million.
“It may be that some buyers are moving now to hedge their bets in case the Budget proves less property-focused than expected. A measured Budget and a rate cut early in 2026 would be the ideal combination to unlock more momentum in the market.”
And Kevin Shaw, national sales managing director at LRG, states: “With the Budget less than three weeks away, perhaps the Bank sees the need for some stability. And it would have been a brave move to change course in such a situation.
“There’s been so much speculation around the 26 November Budget that it’s taken on the status of a political event as well as a fiscal one. The last time we saw something of similar magnitude was the general election of July 2024. Back then the Bank also opted for caution despite the data signalling the need for a base rate reduction. It’s clearly sticking to the same approach.
“The Bank’s reasoning is sound. Inflation has remained stubbornly at 3.8% for two consecutive months – not something to panic about, but not yet at the target level at which to relax either. With so much depending on what the Chancellor unveils later this month, holding steady is the least disruptive choice.
“For the property market, today’s decision means continued stability for buyers and sellers. Perhaps on 18 December, when the Monetary Policy Committee next meets, with political uncertainty out of the way and inflation data moving in the right direction, we may see a reduction …well timed for Christmas.”
Meanwhile Nick Leeming, chairman of Jackson-Stops, sees the decision this way: “This wait and see position is one familiar with many homebuyers at the moment, keen to know what the Chancellor’s final decisions are on tax and spending policies before committing to a move.
“However, this might have been an opportunity missed by the Bank of England’s rate setting committee, in which a 25 basis points drop would have given the lending market a much-needed boost during this November lull. If budget tax rises harm growth, we may see interest rates cuts being used in the future to support greater market movement.
“Earlier this week lenders hedged their bets on a rate cut, with Nationwide reducing mortgage rates by up to 0.25 percentage points, offering the lowest two-year fixed rate since 2022. Moves such as this will be welcome by the mortgaged majority, with the hope they won’t be short lived. Some mortgage rates remain more than double the level they were before the pandemic, with house prices rising 26%* during the same period.
“The slow pace of building is also a concern, with chronic undersupply keeping house prices high. Inflated costs and interest rates are impacting growth in the development sector, especially SMEs, leaving government targets unmet. Greater financial headroom may have been a welcome boost to those struggling to make the numbers work.”
And finally this from Matt Smith, Rightmove’s mortgages commentator:“Ahead of one of the most widely anticipated and discussed Autumn Budgets of recent times, it was unlikely the Bank would go for another interest rate cut so close to the announcement and has opted for stability instead. There’s still a good chance of a rate cut before the end of the year, depending on what is announced in a couple of weeks’ time, and if not then we’re looking at early 2026.
“Some good news is that the cost of financing mortgages has actually come down in recent weeks. We’ve started to see some lenders become more competitive in certain segments of the mortgage market in recent days, and offer some headline-grabbing cheaper rates, as they look to secure some final business before the end of the year.
“The average two-year fixed mortgage rate is now 4.44% – down from 4.95% at this time last year. The downward trend is good, but mortgage rates have come down more slowly than many were predicting at this time last year. Rates have come down even more slowly for five-year products. With the uncertainty surrounding how the upcoming Budget will impact people’s finances, another rate cut soon followed by some notable reductions in mass-market mortgage rate products would be a big boost to home-mover sentiment and affordability.”
This article is taken from Landlord Today