The Monetary Policy Committee (MPC) has voted to hold interest rates at 4% at today’s meeting. Members voted by a majority of seven to two in favour of a hold, with two members voting for a quarter-point reduction to 3.75%.
The Committee said it “remains focused on squeezing out any existing or emerging persistent inflationary pressures, to return inflation sustainably to its 2% target in the medium term”. Twelve-month CPI inflation was 3.8% in August and is expected to increase slightly in September, before falling back towards the 2% target.
Commenting on the decision, Mark Harris, chief executive of SPF Private Clients, says:
“There was a very slim chance that the Bank would cut interest rates this month but ongoing concerns over inflation, which remained steady at 3.8% in August, meant caution prevailed.
“With inflation expected to rise to over 4% at the next reading, double the Bank’s 2% target, the chance of a cut at the next meeting in November is also looking less likely. However, we are encouraged by two members voting for a reduction this time around and hope more of the Committee come round to their way of thinking in due course.
With speculation rife as to whether the Chancellor introduces various property taxes in her November budget, estate agents are reporting that discretionary buyers and sellers are taking a ‘wait and see’ approach. A rate cut today would have been a welcome shot in the arm for the housing market, particularly now that the stamp duty holiday has ended. Despite five rate reductions since last August, affordability concerns persist with borrowers having to get used to higher mortgage rates.
Those looking to take out a new mortgage or refinance in coming months should plan ahead as much as possible, seeking advice from a whole-of-market broker such as SPF Private Clients. Rates can be booked up to several months before you need them so it’s worth doing this for peace of mind. If rates have fallen by the time you come to take out your mortgage, you should be able to move onto a cheaper deal at that time.”
