Bank of England holds base rate at 5.25%

14th December 2023
Home > News > Bank of England holds base rate at 5.25%

Reported by Robyn Hall - The Negotiator 

The Bank of England has decided to keep the base rate at the same level for the third review in a row.
The Bank of England has decided to hold the base interest rate at 5.25% for the third consecutive review. The last review was November 2nd.

The Bank’s Monetary Policy Committee (MPC) meets eight times a year to set interest rates. Its nine members vote on whether to increase, reduce or hold interest rates. At the last decision, six of them voted for no change and three voted for an interest rate hike. The same happened this time around too.

SOME WAY TO GO

Bank Governor Andrew Bailey says: “We’ve come a long way this year, and successive rate increases have helped bring inflation down from over 10% in January to 4.6% in October, but there is still some way to go.

“We’ll continue to watch the data closely, and take the decisions necessary to get inflation all the way back to 2%.”

The decision to hold rates follows on from the US Federal Reserve holding interest rates yesterday with financial markets believing it’s likely the US will begin cutting interest rates next year.

The Royal Institution of Chartered Surveyors Residential Market Report revealed this morning that cheaper mortgages are starting to have a positive impact on the housing market with declines in national house prices slowing and sales expectations for the year ahead the most positive since January 2022.

Downwards pressure on mortgage rates is growing by the day.” Interest rate stability is exciting.”

SEE WHAT HAPPENS

Alex Lyle, Director of Richmond-based Antony Roberts, says: ‘Buyers relying on mortgages to fund their purchase have been waiting to see what happens with rates, as this has such an impact on affordability.

Alex Lyle, Antony Roberts

“Even those who don’t need to take out a mortgage will take note of general market trends, with interest rate movements being one of the biggest drivers behind buyer decision-making.

“Another rate hold will be viewed as another step in the right direction, fuelling hopes that longer-term stability on rates is on the way and that they might even start to come down in the not-so-distant future.

“This should increase confidence in those who have been anxious about committing to a property purchase, so is encouraging for the market as we move into a new year.”

RELIEF FOR BUYERS AND SELLERS

Jason Tebb, Chief Executive of OnTheMarket, adds: “Holding rates steady yet again will be a relief for buyers and sellers.

Jason Tebb, OnTheMarket

“They can take this as further confirmation that the base rate has peaked after many months of painful increases, which have stretched affordability and made it harder for buyers and sellers to plan ahead with confidence.

“The question everyone is now asking is: when will the Bank of England start reducing rates?

“In the meantime, a focused cohort of resilient buyers and sellers are getting on with the business of moving.”

HARSH MIX

Nathan Emerson, Chief Executive of Propertymark, says: “There is little denying this year has been difficult for many, with a harsh mix of high inflation and elevated interest rates to contend with.

Nathan Emerson, Propertymark

“There is no shying away from the fact many households have struggled to get by each month. With rates remaining unchanged yet again, Propertymark is optimistic the peak of the turmoil has now hopefully passed but it will take a little time to see full momentum and confidence back within the housing market once again.

“It’s also important to highlight almost 1.4m households across the UK have fixed-rate mortgage deals that will come to an end over the coming twelve months, so the road to a fully robust housing market will be closely linked and we may see a few more bumps in the road before a full recovery.”

MORE GOOD NEWS

Matt Smith, Rightmove’s mortgage expert, says: “Today’s decision to hold the Base Rate as expected is some further good news to those planning a New Year move and looking to take out a mortgage soon.

Matt Smith, Rightmove

“We typically see more people consider their moving plans after Christmas, and after 20 consecutive weeks of steady average mortgage rate falls, this is the most settled mortgage market we’ve seen for a while, giving confidence to those thinking of moving. However, rates do remain at elevated levels.

“The market opinion remains that Base Rate has reached its peak. The fact that swap rates – the underlying cost of mortgages to lenders – fell further after the latest UK GDP data was published yesterday, was another indicator that the markets were confident about how today’s announcement would play out.

“Many of the factors that contributed to the hold in September and November are continuing, and a flattened Base Rate, which could begin to fall in 2024, is looking increasingly likely.”


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