Will they cut, won’t they cut? With mortgage rates going the right way recently, in anticipation of further interest rate cuts from the Bank of England, today’s decision to keep rates on hold at 5% is something of a disappointment if not a surprise.
With the US Federal Reserve coming out with a larger than expected cut to US interest rates yesterday of 0.5%, there was always a glimmer of hope that the MPC might continue with the rate cuts which began last month. With the Autumn Statement now firmly in our sights, there is much for mortgage and property professionals to consider as we look towards Q4 and 2025.
With their reaction to today’s interest rate news, Mortgage and Property professionals have shared the following comments:
Jatin Ondhia, CEO of Shojin, said: “Sticky inflationary pressures have prompted the Bank of England to maintain their conservative approach. While the focus on economic stability is understandable, today’s decision will surprise many who feel it is time to continue the downward trend and lower the base rate in order to revitalise growth opportunities.
“Within the property sector, homeowners and developers have had to deal with the double sting of the high inflationary-high interest environment, with the former having faced higher mortgage rates than at any point since the financial crisis and the latter finding it harder to access much-needed finance.
“With that said, this is still an important moment for investors to reassess their portfolios as base rate cuts are likely to appear again later in the year. Real estate continues to present strong potential, while alternative investments could also offer valuable opportunities to diversify and tap into fresh avenues for growth.”
Paresh Raja, CEO of Market Financial Solutions, said: “The underlying data in yesterday’s CPI figures dashed any hopes for a rate cut today, but this decision presents an opportunity for investors to prepare for a likely surge in market activity. Indeed, the decision comes as house prices continue to rise, and with economists forecasting that the BoE will cut the base rate at the next meeting, we expect demand to experience an uptick in Q4.
“With this in mind, property investors and their brokers should use the next month to consolidate their portfolios and ensure that they have a robust strategy in place to help them capitalise on any opportunities that a more relaxed monetary environment could create. The ability to move at pace will be crucial as activity picks up, so having the right financial tools to hand will be of the utmost importance as well.
“On this front, lenders also have a vital role to play, and it’s essential that their product offerings are ready to meet the evolving needs of investors and a potential surge in demand. In doing so, they can contribute to sustaining the market’s recovery after what has been a challenging few years.”
Tony Hall, Head of Business Development at Saffron for Intermediaries, comments: “Two months ago, we were debating whether or not 2024 would see the first interest rate cut in four years. While the base rate has stayed the same today, many are predicting two more cuts before the end of year, and activity in the mortgage market is starting to ramp up as a result. Good levels of supply, with sales instructions up 7% in August compared to the 2017-19 average, points to greater levels of activity for the remainder of the year.
“While the October budget will help provide more clarity on longer-term expectations for the market, it is safe to say confidence in the market is increasing, and a busy Autumn period will be supported by falling mortgage rates. It is essential that those looking to take advantage of this period seek professional advice. Every buyer, mover and builder has a unique financial situation, and brokers can help find them the right lender to suit their needs.”
Joe Pepper, UK Chief Executive Office at PEXA, said: “The decision to hold the base rate is a disappointment for borrowers, but it is not a surprise following yesterday’s inflation figures. We now hold our breath until the next MPC meeting in November, but that decision will also be contingent on the market’s reaction to the Labour government’s first Budget.
“Whether the rate is reduced in November or not, we will see huge spikes in demand in the final two months of the year thanks to the fact that millions of people are coming to the end of their fixed rates. Coupled with a Budget that might well reinforce the government’s focus on addressing the issues in the front end of the property market for the economic benefits it brings, there will be a spike in demand from consumers that will inevitably pile the pressure on conveyancing infrastructure that is already overburdened and simply not equipped to handle it.
“Investing in a digital overhaul of the back-end processes and technology is crucial in addressing this. This necessitates private investment primarily but making it effective nationwide needs strong support from government too. Cross-sector commitment and collaboration to achieve modernisation is vital, and it can’t come soon enough.”
Nathan Emerson, CEO of Propertymark, comments: “Since the initial rate cut a few months ago, many people will have been closely awaiting any further anticipated cuts, however, it remains crucial the Bank of England continue to implement cuts in a controlled and functional manner, as not to fast reverse the economic progress so far.
“Bearing in mind yesterday’s figures regarding inflation, it is understandable why the decision to hold the base at current levels has been employed. Propertymark remains keen to see full consistency within the wider economy and for any eventual base rate cuts to create a pathway for people that provides long-term stability, confidence and affordability.”
Guy Gittins, Chief Executive Officer, said: “The nation’s homebuyers will have understandably been hoping for a second consecutive rate reduction today, having already responded favourably to what was the first cut in four years at the start of August.
“Since then, we’ve seen an increase in buyers entering the market by way of strengthening mortgage approval numbers and they are doing so with far greater confidence, which is helping to cultivate a consistent level of upward house price growth.
“Whilst rates have been held today, this improving market momentum is only likely to strengthen further, as mortgage rates continue to trend downwards, putting the property market in very good stead for the remainder of the year.”
Nick Hale, Chief Executive Officer at Movera, a leading home-moving group, said: “The Bank of England’s decision to hold the base rate at 5% provides a measure of stability, which is not entirely negative for the surveying sector. While affordability challenges persist for home buyers, a steady base rate allows for more predictable market conditions. Buyers and lenders can plan with more certainty, and this consistency can help the housing market find its footing.
“For the surveying sector, the focus will remain on accurate valuations and risk assessments, but with the market settling, there’s an opportunity to adapt to the new norm. The sustained rate environment gives surveyors the chance to refine their processes and ensure they are providing the most reliable data to both buyers and lenders.
“The question now is: how will the sector continue to innovate and support home buyers in a market where rates remain elevated but stable?”
Molo’s Chief Commercial Officer, Mark Michaelides said: “The Bank of England’s decision to hold the base rate at 5%, despite Wednesday’s encouraging headline inflation reading and the Fed’s 50bps reduction overnight, reflects ongoing caution in the face of persistent inflationary pressures in the services sector. We do however expect further rate cuts to come in the autumn, which will provide an immediate boost to existing borrowers on variable rates and those looking for new fixed rate deals.”
CEO of Octane Capital, Jonathan Samuels, commented: “The mortgage sector has been responding well to the market certainty that followed the Bank of England’s initial decision to hold rates at 5.25% and this market sentiment has only improved further following the base rate reduction seen at the start of last month.
“As a result, we’re not only seeing the rates offered on many products reducing, but the range of products available is also growing, with this greater level of choice helping more buyers to enter the market.
“Today’s decision to hold interest rates at 5.00% is unlikely to dent this growing market positivity and we expect more buyers to be tempted back into the fold, while the overall health of the UK property market will continue to strengthen.”
Arjan Verbeek, Perenna, said: “While the UK is showing some signs of economic recovery, the Bank of England’s decision to maintain interest rates will likely disappoint many consumers hoping for another cut. With the average asking price of UK homes continuing on an upward trajectory, the prospect of securing a large enough mortgage has become even more out of grasp for families.*
“If homeownership levels are to be a key metric of economic growth, then it is clear the UK is falling significantly behind its European counterparts**. The UK market has some of the best property stock, yet thousands find it difficult to become a homeowner. To restore homeownership to peak levels last seen almost two decades ago, we must expand alternative mortgage products like long-term fixed rate mortgages that give people more options, security and flexibility to buy their home.”
Kevin Roberts, Managing Director, Legal & General Mortgage Services comments: “Today’s base rate decision is a continuation of the thoughtful approach we have seen from the Bank of England this year. However, the mortgage market remains primed for a strong final quarter. We are seeing the return of sub-4% mortgage products for the first time since April, and supply is increasing, with the average number of available homes per estate agent at its highest since 2014. To take advantage of these opportunities, it is important for buyers or movers to sit down with a professional adviser to get the best possible deal. Brokers have access to a broader range of products and can use their experience to direct buyers towards rates, products and terms that work for them.”
Ryan McGrath, Director of Second Charge Mortgages at Pepper Money, comments: “Despite fireworks over the pond with US interest rates being cut yesterday, the Bank of England’s decision to hold following its own cut six weeks ago reflects a stubborn inflationary picture. While some may have hoped for a further rate cut, this hold provides a degree of stability that will reinforce the positive momentum we’ve been seeing in the property market since the last rate reduction and conclusion of the election.
“As we enter what is traditionally the busiest and most expensive period of the year, it’s natural for people to consider their finances and what changes they may want to make in the New Year. High levels of unsecured debt can put significant pressure on people’s finances during this period, and with rates staying static, further borrowing may not be within reach. Homeowners should consider alternative forms of secured credit such as homeowner loans to reduce their monthly outgoings by consolidating their debts, or to fund home improvements. A homeowner loan, in the right case, can offer a flexible and often more cost-effective solution.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said: “Today’s decision was widely expected given the cautious approach the Bank of England continues to adopt. News of inflation remaining unchanged would have certainly been a relief for the central bank, but not enough for it change course and move to sequential cut. The Fed’s large cut last night wasn’t a big enough driver either, even with the central bank’s tendency to follow their lead. Nonetheless, sentiment continues to point towards the next cut coming in November, barring any surprises or potential shocks to the economy – either at home or from abroad.
“Even without another rate cut though, we are continuing to see activity across the market, with lenders in all sectors making reductions and criteria changes to encourage new business and increase market share. From our perspective, clients have responded well to the changes in the market and returned from the summer break with house moves back on the agenda. The best brokers are already responding to this and are proactively positioning themselves to help clients navigate the market and seize opportunities.”
Richard Pike, chief sales and marketing officer at Phoebus, said: “With economic growth in the UK treading water and inflation likely to increase again towards the end of the year, this Committee decision is unsurprising. Markets were predicting a one-in-five chance of a Bank Rate cut, so today’s decision falls in line with this and won’t cause major changes in product pricing.
“That said, many lenders have been holding back dropping fixed rates for as long as they could, so we can still expect more competitive pricing. I expect we’ll see a different picture in November, when Markets are predicting a 0.25% reduction in Base Rate”.
Daniel Austin – CEO of property investment firm ASK Partners, said: “The Bank has decided to hold interest rates as expected after yesterday’s inflation print. While the decision doesn’t directly benefit mortgage holders, we have seen mortgage providers slash rates recently and the period of stability has seen borrowing reach almost a two-year high.
“On the investment side, we have witnessed a cautious increase in capital coming back into the real estate market. Today’s decision will be welcome news and may partially offset investor unease as we head towards the Autumn Budget and likely further tax rises.”
