Propertymark joins calls for interest rate cut

Propertymark has joined growing calls for the Bank of England to cut interest rates.

Interest rates have been held at 5.25% since August 2023 but as the rate of inflation has slowed and the economy has official entered a recession, there are now calls for a cut to boost the property market and support first-time buyers.

Swap rates, which influence mortgage pricing, have gone up in recent weeks as hopes of an imminent interest rate cut fade due to high pay growth and sticky inflation that remains above the Bank of England’s 2% target. 

Mortgage rates have started to climb as a result of this after dropping below 4% in the first few weeks of the year.

Bank of England Governor Andrew Bailey told MPs on the Treasury Select Committee yesterday that policymakers don’t necessarily have to wait until inflation gets closer to its target before cutting rates.

This has got Propertymark thinking.

Nathan Emerson, chief executive of the agency trade body, said: “A fall in house prices is necessary to ease the pressure on people’s finances so they can discover an affordable middle ground to keep the cogs of the property market moving.  

“Since the Bank of England stated that inflation does not need to drop to two per cent before they cut interest rates, we remain hopeful that a reduction in interest rates can happen sooner rather than later to prevent any further strain on homeowners and allow more first-time buyers the opportunity to step onto the property ladder.”