Despite predictions of an uplift, interest rates have been kept on hold at 0.5%.
Amid signs of a strengthening economy, there had been anticipation that the Bank of England England’s Monetary Policy Committee would raise the base rate to 0.75%. However, recent economic activity – which paints a weaker picture – has meant they have instead kept the rates at 0.5%, with a member vote of 7 to two.
Commenting on the decision was David Westgate, Group Chief Executive at Andrews Property Group. He said: “I’m not surprised that the Base Rate has been held at 0.5%. Whilst speculation was high earlier this year that the Bank of England’s Monetary Policy Committee would increase it the next time it met, I was doubtful that this would be the case.
“You only need to look at the fact that the real economy remains challenging and it becomes self-evident that the price of property is a stretch for many consumers. Moreover, the property market is naturally self-regulating thanks to the balance between supply and demand and affordability. In reality, we are now seeing more properties coming to market which is giving buyers more choice. Asking prices are consequently being reviewed and this mechanism in effect controls housing inflation without the requirement to change the base rate.
“Of course, rates will almost certainly creep up in time but when they do, we shouldn’t fear this as most home owners will be on fixed rates so will experience little immediate impact.”