Housing market optimism as bank of England holds interest rate

The Bank of England has moved cautiously today and held the interest rate at 5.25% for the fourth time in a row, despite its Monetary Policy Committe being divided on the decision.

Despite the split most financial analysts believe the inflation trend is firmly downwards, with some even predicting that the Government will reach its target of 2% by April.

This follows optimism across the housing market after leading mortgage lender Nationwide reported that UK house prices rose by 0.7% in January.

Robert Gardner, Nationwide‘s Chief Economist, said “There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down.

“This follows a shift in view amongst investors around the future path of Bank Rate, with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.

“How mortgage rates evolve will be crucial, as affordability pressures were the key factor holding back housing market activity in 2023.”

Iain McKenzie, Chief Executive of The Guild of Property Professionals, said “... with inflation expected to continue falling, many are optimistic we’ve reached the peak of the rate-rise cycle – potentially prompting further cuts to the base rate.

“This is likely to motivate lenders to continue reducing mortgage rates, enhancing accessibility to homeownership, particularly for first-time buyers eager to enter the property market.”