Bank of England interest rate announcement |1 February 2024

The Bank of England again holds interest rate

As widely expected, the Bank of England has just announced that it would hold the interest rates at 5.25%.

This decision came after inflation unexpectedly rose to 4% in December, up from 3.9% the previous month.

Despite increasing 14 times from 0.1% in December 2021 to 5.25% in August 2023 since then, and to much relief from Britain’s borrowers, it has since opted to hold the rate three times.

While the impact of the stabilising of interest rates is still working its way through various parts of our monetary system, the BoE is likely to want to see inflation ease before we are likely to see interest rates drop further.

Uncertainty continues to influence the housing market

As we have reported numerous times in recent years, uncertainty starves the housing market of the oxygen of confidence it desperately needs. So those with a property to sell are having to work harder to sell it for the price they want. In the main most homebuyers are reluctant to move for fear of losing favourable mortgage rates, and a decline in buyer demand is prompting a re-consideration for many as to whether it is the right time to sell.

With many fixed-rate products yet to come to an end, the market has not yet seen the full impact of the rate rise on mortgage availability. However, this will change dramatically during the next 6 months, and it remains to be seen what impact this will have.

Global events like the ongoing crisis in the Middle East and the prolonged campaign in Ukraine could also further impact costs, especially where food is concerned. It is not beyond the realms of possibility that inflation could start to rise again. If inflation increases, interest rates will likely have to follow a similar course.

From our point of view, we have seen a pretty active start to 2024 with several off-market deals being agreed at very favourable levels. This is great news for our clients after several years of paying top prices to secure the properties that they so desperately need.

Whether this means good news for the market as a whole remains to be seen, but 2024 certainly promises to be as unpredictable as any other recent period of 12 months.

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