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Interest Rates Held at 5.25% Despite Inflation Hitting Target Level

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    How Does the Held Interest Rate Impact the UK Property Market?

    The Bank of England (BoE) announced today that they are holding interest rates at 5.25% for the seventh time in a row.

    Rates have been brought to a high level, and there has been a cautious approach to future cuts to try to slow down inflation. This week, it was revealed that inflation had hit the central bank’s target level for the first time in three years, but according to the committee, this wasn’t enough to warrant a cut in the Base Rate.

    Bank of England Governor Andrew Bailey said: “It’s good news that inflation has returned to our 2% target. We need to be sure that inflation will stay low, and that’s why we’ve decided to hold rates at 5.25% for now.”

    Does this latest decision mean anything for the buy-to-let property market?

    Further Reading: Learn about where the best buy-to-let areas are or how to get into property investment in the UK with our RWinvest guides.

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      When Will The First Interest Rate Cut Happen?

      The rate has stood at its highest level for nearly 16 years for seven consecutive meetings now, and many are wondering when we will finally see the first rate cut.

      This week, inflation finally hit the Bank of England’s target for the first time in three years. Prices rose 2% in May from the year before, down from a rise of 2.3% the previous month. However, most experts predicted that this would not be enough to warrant a rate cut this month, and they were proved right. Many are pointing to price rises in the service sector, which remained high in May with an annual increase of 5.7%, as one of the main reasons for this.

      The vote share from the nine-member Monetary Policy Committee is considered a clue to how soon we will see a lowering of the Base Rate. The majority voted 7-2 to hold rates unchanged from the last meeting. However, according to BBC News, the committee minutes suggest that the Bank of England has ‘opened the door to cutting interest rates in August’.

      Learn More: Explore buy-to-let in Liverpool or get tips on where to invest in property in London with our area-based investment guides.

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      Does This Change Anything for the UK Property Market?

      One of the most direct influences that the BoE Base Rate has on the housing market is mortgage rates. This can also affect house prices. Once mortgage rates become more attractive, it can potentially signal a coming increase in property prices.

      It has also been theorised that current high interest rates could be dampening housing transactional activity levels, as buyers are waiting for a change in rates before making a move.

      To find out more about the UK property market take a look at some of our buy-to-let area guides, covering topics such as investment property Southend-on-Sea and investment property Plymouth.

      Interest Rates Held at 5.25% Despite Inflation Hitting Target Level

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      Jessica Ferris

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      Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.