At its meeting, the MPC voted by a majority of 5:4 to hold the base rate, as opposed to cutting it by 0.25% to 3.75%, which four members of the MPC voted for.
This decision follows a hold at 4% in September after a cut to 4% from 4.25% in August.
At the end of October, the HSBC UK Broker Barometer found that almost half of brokers believed a 0.25% cut would most benefit the property market.
‘Decision breaks the streak of quarterly rate cuts’
Prior to the hold, analysts were split over what the MPC’s move would be, given that the September inflation rate of 3.8% was still sitting well above the bank’s 2% target. However, the Monetary Policy Summary published when the hold was announced said Consumer Prices Index (CPI) inflation is estimated to have “peaked”.
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Earlier this week, Chancellor Rachel Reeves warned of “hard choices” and wouldn’t rule out tax hikes ahead of the Autumn Budget on 26 November – uncertainty that may have factored into the MPC’s decision to hold the base rate despite the encouraging estimate of CPI inflation.
Ben Thompson, deputy CEO of Mortgage Advice Bureau (MAB), said: “It’s no surprise that the Bank of England has acted with caution, choosing to hold the base rate at 4%. This decision breaks the streak of quarterly rate cuts, and with the Autumn Budget fast approaching and meaningful tax rises likely to be imminent, the bank is clearly waiting for certainty on the inflationary outlook before making any further moves. Homebuyers and movers should therefore anticipate a stable rate environment for the time being.
“While the headline rate may feel elevated, the reality on the ground is much more encouraging. Three years of economic adjustment have delivered a much brighter picture: house price growth has flattened, wage growth in real terms is on the rise, and borrowing power is significantly better than it was 12-24 months ago. With lenders offering a wealth of innovative products, there are countless opportunities for prospective buyers to secure a competitive deal.”
