Interest rates held but will it tempt homebuyers back to the market?

Interest rates were held for a second consecutive month yesterday, giving agents renewed hopes that the cost of borrowing has reached its peak and demand may return to the market.

The Bank of England’s Monetary Policy Committee voted to keep the base rate at 5.25%, claiming there have been “signs of some impact of tighter monetary policy on the labour market and on momentum in the real economy more generally.”

Agents have expressed hope that this could help buyers return to the market.

Alex Lyle, director of Richmond estate agency Antony Roberts, said: “This Autumn, we’ve found that buyers relying on mortgages to fund their purchase have been waiting to see what happens with pricing, as this has such an impact on affordability. 

“Another interest rate hold will be viewed as a further little pigeon step in the right direction, giving hope that longer-term stability on rates is on the way. This should fuel confidence in those who have been anxious about committing to a property purchase.”

Mark Manning, managing director at the Northern Estate Agencies Group, added: “The news that the Bank of England has decided to hold rates again will be a welcome relief for homeowners and potential buyers who have been squeezed by 18 months of sustained rises.

“At the present rate, I believe that the property market will be able to achieve a soft landing in respect of price falls, which in our region, have dropped by between 6% and 8%.
“As we push into 2024, I think inflation will continue to be brought under control and interest rates will start to ease back towards four per cent, which will massively help to improve affordability.”

Nathan Emerson, chief executive of Propertymark, described the move as “steady reassurance” for the housing market.

He said:  “Many families continue to struggle regarding the cost-of-living crisis, and it will hopefully come as a potential encouragement to families there is no new elevated squeeze on their monthly budgets.

"Propertymark is still extremely keen to see both inflation and interest rates firmly come back under control once again. For a healthy property market, households need a longer-term confidence beyond only financially making it to the end of each month. 

“It is encouraging to witness many buyers still having the confidence to enter the market currently, but we need to see stability and a firm end to the potential dread some people experience each time there is new interest rate decision.”