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Will the Bank of England ever work towards lowering interest rates?

The Bank of England have decided to keep interest rates at 5.25% and have claimed cuts are ‘in play’. Housing experts have gathered to share their opinions on the news.

Yesterday, 21st March 2024, the Bank of England revealed they will be keeping interest rates at 5.25% despite the ONS revealing that earlier in the week inflation had dropped more than expected.

Tower bridge under gray sky

In a statement, governor Andrew Bailey, said: ‘In recent weeks we’ve seen further encouraging signs that inflation is coming down. We’ve held rates at 5.25% because we need to be sure inflation will fall back to our 2% target and stay there.  

‘We’re not yet at the point where we can cut interest rates, but things are moving in the right direction.’

Financial markets are estimating that the first quarter-point cut in June will be when rates begin reducing. In addition experts are also forecasting that two more reductions will occur before the end of the year to around 4.5% amid a sharp fall in inflation over recent months.

Commenting on the news, Guy Gittins, CEO of Foxtons, said: ‘Homebuyers have been waiting patiently for an interest rate reduction and while it is largely expected to come this year, it seems as though they will have to wait a little longer still. The positive to take is that an air of stability has returned to the UK property market since rates were held at 5.25% last September and this has helped revitalise buyer activity levels in recent months.

‘In fact, it’s fair to say that the market has picked up the pace considerably and not only have we seen a 23% increase in sales enquiries versus this time last year, but there’s also been a 19% increase in viewings activity, and we reported on 5 March 2024 that we’d seen a 31% increase in the number of offers being accepted.’

In addition, Jason Ferrando, CEO of easyMoney, claimed that although the news has come as a bit of a blow, it was always to be expected.

‘Despite another surprise dip in inflation this week the Bank of England was always likely to maintain its slow but steady approach to managing the economy by keeping the base rate held at 5.25% for a fifth consecutive decision,’ Ferrando said. ‘While this will no doubt disappoint the nation’s homebuyers who have been eagerly anticipating a reduction in the cost of borrowing in 2024, it will add further stability to the property market, whilst also allowing those attempting to form a nest egg a further period of stronger returns on their savings.’

Directing the focus slightly away from homebuyers, Sam Reynolds, CEO of Zero Deposit, said landlords could also benefit from a decrease in high interest rates.

Reynolds said: ‘It’s not just homebuyers who were hoping to see rates come down today, landlords were also in need of some property market positivity to help revitalise their appetite for buy-to-let investment.

‘Not only have many been suffering at the hands of expensive variable rate products, but all too often they will have been doing so while only repaying the interest on their loan. As a result, they will have seen the cost of their mortgage increase by a far greater margin in the long run compared to those making full monthly repayment.’

However, CEO of Open Property Group, Jason Harris-Cohen, has claimed that although the Bank of England is working to ensure inflation rates keep coming down, ‘a rate cut’ is what the property market needs ‘to really move forward at pace.’

Image: Raul Varzar

More on this topic:

Third time lucky: Bank of England set to hold interest rates following inflation warning

Bank of England’s path of pain: Interest rates expected to remain high

Emily Whitehouse
Writer and journalist for Newstart Magazine, Social Care Today and Air Quality News.

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