How Today’s Interest Rate Decision Affects Buyers, Sellers and Landlords Going Forward

Breaking News …. Bank Rate Held at 3.75%  …. Here’s What You Need to Know

Ask most people what the Bank Rate (commonly known as the interest rate) means to them and you’ll probably get the same answer.

What? Or maybe, err?

Because most people don’t know much about Bank Rate and how it affects them.

But for anyone in the property market – or thinking of jumping into it – this is muy importante indeed.

And as ethical agents, transparency is one of our guiding lights. We believe buyers and sellers should have the complete picture before making a move.

(That’s one of the reasons we do posts like this.)

While the official Bank Rate set by the Bank of England isn’t the same as the interest rate you pay on your mortgage they are kinda linked.

When Bank Rate goes up mortgage interest rates usually go up. Vice versa when it goes down.

So trying to predict where Bank Rate is going is really useful if you’re thinking of making a move.

But over the last couple of years crystal balls have had their work cut out. (All say aww for crystal balls.)

Experts have had it tough too. Many predicted Bank Rate would be lower by now. (Moral of the story – don’t always believe experts.)

It’s been a real PITA for the Bank of England’s Monetary Policy Committee – the people who make the decision – as well.

The economy is sluggish. People are more cautious about spending their dosh.

That would normally see Bank Rate cut. To give the economy a shot in the arm.

Inflation has made their decisions more difficult. At 3.4% it’s far higher than the 2% target the Bank are supposed to work towards.

That would normally see the rate go up. To keep inflation in check.

Anyway, at the end of the day – after gallons of tea and the odd packet or ten of chocolate Hob Nobs no doubt – they decided to keep Bank Rate on hold this time.

So what do we think this might mean for the market?

Most experts are still predicting there will be one or two small rate cuts this year. So today’s decision actually makes it look more likely there will be a cut in March or April.

For homeowners with a mortgage, today’s decision is still positive news. Mortgage payments could be on the way down soon. (But remember if you have a fixed rate mortgage the interest rate stays the same until the end of the fixed term.)

For buyers – including first time buyers – the cost of new deals should continue to fall too. (Maybe just a smidge perhaps, but it could make a new home that bit more affordable.)

What’s good for buyers is generally good for sellers when it comes to falling rates. A rate cut in the spring – traditionally a busy time of year for moving anyway – could be very good news indeed.

Let’s not forget landlords. Landlords are facing a fair few challenges at the moment. Lower mortgage rates on the horizon should help out a bit.

We hope you’ve found this explainer useful. If you’re thinking of selling please don’t hesitate to get in touch. We’ll be happy to offer you our honest opinion on how all this affects the saleability of your home and a current market valuation.

Estate Agency Done Ethically

We are proud members of the Ethical Agent Network (EAN).

A national group of independent agents who have been independently tested to ensure we meet strict standards of honesty, service, professionalism, and community care.

To find out more about what we do and why we passed the EAN and are the only local agency in the network, contact us today.