Bank of England interest rate announcement | 21 March 2024

The Bank of England today announced it will again hold the interest rate at 5.25%.

Despite inflation falling to 3.4% in February to the lowest levels for two and a half years it is still some way off the 2% target set by the Bank of England.

As we have said many times previously, a reduction in the rate of inflation does not mean that prices are falling, it means that they are rising more slowly.

Inflation remains volatile but it is predicted to continue to fall in the spring, reflecting the predicted changes in energy and services.

In his Budget speech on 6 March, Chancellor Jeremy Hunt said he expects UK inflation to fall to the Bank of England’s target “in the next few months”, which suggests a reduction in the Bank rate at some point in the coming months.

Rightmove are reporting that the housing market in March is seeing a mini revival and reporting strong buyer demand.

Our data from across the country says that whilst there are still a few buyers out there, new instructions are well below what we would normally expect to see at this time of year which is probably artificially boosting things.

Interestingly, and despite what has been noted, some mortgage lenders have pushed up the cost of mortgages for current customers looking for a new deal or coming to the end of an existing fixed-rate deal, based on information provided by Forbes.

This could mean even more homeowners find themselves tipped into even greater financial challenges as the increased cost of borrowing is added to the increased cost of borrowing and living we have already seen.

According to Zoopla’s Rental Marketing Report published in March, the average rent for new lets in the UK has risen +7.8% in the last year, the slowest rate of growth in two years. Demand for rented homes has fallen but it still considerably outweighs demand.

This confirms what we are seeing and rental stock across the board is still painfully low.

So, while the battle on inflation seems winning, it is less clear when the Bank of England will start cutting interest rates in response.

We have said for many years that confidence is the oxygen for the housing market and it looks like it will be some time before there is any signs of recovery.

Indeed, with continued economic and global uncertainty and a general election on the way, it might well be that things need to get worse before they show signs of getting better.

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