The Bank of England’s decision to raise the base rate to 5.25%

Following the Bank of England’s decision to raise the base rate to 5.25%, a 0.25% increase, Nick Leeming, Chairman of Jackson-Stops, comments:

“Although expected, it is fair to say that most were hopeful that the Bank of England would have refrained from yet another rate rise, with this now being the 14th hike in a row. Today offers a very different picture to December 2021, when the base rate sat at 0.1%. But green shoots are growing by the day. Inflation is now falling, which suggests that the tide may be turning, and if this remains the case for July and August, this could be the last rate hike for some time allowing investment markets time to settle again.

“For the property market, while incremental changes to the base rate won’t derail buyers and sellers plans entirely, the increased pressure that has been put on the cost of borrowing means realistic property pricing is essential to achieve a sale, especially at the mid-level of the market.

“What is good news for the transaction market is that mortgage approvals have continued to increase. Mainstream lenders have announced rate cuts on their mortgage deals and first-time buyers remain active, often the lifeblood of our industry. Across the Jackson-Stops network we have seen a 13% increase in completions in July compared to June, showing that committed buyers remain resolute in their searches.

“It’s too soon to tell what the race to the end of the year will look like; while it’s still not a sprint to the finish, it is certainly not a marathon either. For now, the market remains buoyed by continued exchanges and steady demand levels from an intersection of buyers. It’s clear the market is far from static even in the face of economic headwinds.”