The mortgage market accepted the Bank of England’s decision to hold base rate at 3.75% today, but said future rises were inevitable.
The decision to pause base rate came as the MPC decided it was necessary to keep inflation under control.
The market agreed with the decision to hold base rate, but said the MPC could not keep playing the same card forever.
RAW Capital Partners chief executive Ben Nichols said: “This decision will come as a relief to borrowers. Such has the turn around in economic conditions been in the past six months that while previously the property market was expecting steady base rate cuts, today a hold feels like a victory.
“While strikes in the Strait of Hormuz have added upwards inflationary pressure and oil prices remain volatile, the annual inflation rate has been slowing more than expected in recent months. This has allowed the MPC to provide some continuity for brokers and borrowers by holding interest rates for the fifth consecutive time. Such stability is to be welcomed during a period of political and economic volatility.
“But there remain doubts as to how long we can stay in this holding pattern. Many economists expect interest rates to rise later in the year. The extent of that rise will be determined by several key factors, most notably: how the conflict in the Middle East unfolds and what this means for oil prices, and how the market responds to the policies of the new Andy Burnham government, including the Autumn Budget.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said:“A hold at 3.75% was overwhelmingly the expectation.
“For the property market, the practical read is that mortgage pricing had already moved ahead of the announcement – several major lenders raised rates last week – so today was unlikely to be the trigger for further movement, but the tone of the Monetary Policy Report could keep upward pressure on fixed-rate pricing into the autumn.”