After much speculation, today (19 March) the Bank of England announced it would keep interest rates at the same level – 3.75%, meaning that borrowing costs are unchanged.
The decision by the Bank was unanimous by all of those involved, reflecting the general uncertainty about economic pressures.
With current geopolitical tensions and the war in Iran now impacting gas and oil prices the economic outlook is more uncertain than it has been for a while. As a result, the Bank of England decided to opt for a ‘wait and see’ approach in terms of the coming weeks and the impact that events will – and won’t – have on the British and global economies.
Before the Iran conflict started there was a lot of positivity in the market, with much talk of a further interest rate cut. Inflation had fallen to 3% in January and the Bank rate was at its lowest level since February 2023. Together with the high number of homes on the market, it was very much a buyers market with confidence across all sectors.
The evolving situation in the Middle East has understandably led to uncertainty, with economists now shifting their expectations for the timings of any potential interest rate cuts. However, today’s decision to hold rates has given stability and guidance to the market, something that the industry and homeowners will welcome.
Commenting on today’s Bank of England announcement one of our founders, Helen Worrall, says: “There has been some uncertainty in the housing market among lenders and borrowers over the last week, particularly when a number of mortgages were withdrawn. This didn’t come from the Bank of England, but through a general nervousness around global events.
“In West Wales we’ve not seen any slow down in the market. Since the Autumn budget was confirmed last year movers have had a renewed confidence to act, and that’s been particularly evident since the start of this year.
“However, with recent events I would say that there is a bit more caution among buyers when it comes to their finances. The demand is still there for high quality homes that are sensibly priced, but buyers are assessing their mortgage requirements carefully and are keen to lock in the best deal with some contingency planning.
“While an interest rate cut is always welcome, today’s decision will keep mortgage payments steady and add stability to the property market, giving time for the Bank to pause and assess what is an evolving situation.”