Estate agents and mortgage experts have reacted to the Bank of England’s surprise decision to keep base rate unchanged at 0.5 per cent – and almost everyone says a cut is on its way next month, even if it has not happened now.
“A reduction is still on the cards. The Bank of England is preparing its next forecast and will have the benefit of post-referendum data for its next meeting in August. It will be able to make a more informed decision on the extent of measures to stimulate the economy and calm post-referendum nerves by then” explains Fionnuala Earley, chief economist at the Countrywide group.
“There are many first-time buyers already taking advantage of very low mortgage rates. If a rate cut comes next month, it will give an additional boost to those who may have been thinking twice about jumping onto the property ladder at the present time” says Jeremy Leaf, north London estate agent and a former RICS chairman.
On the mortgage front, there is also widespread belief that a cut remains likely over the summer, despite yesterday’s decision.
“Lenders are already factoring a rate cut into their pricing, with Santander increasing the premiums over base rate on some new products to protect its margins in readiness of a rate cut. Meanwhile, Scottish Widows increased the margin on its new trackers by 35 basis points” insists Mark Harris, chief executive of mortgage broker SPF Private Clients.
“The message from lenders is that it is business as usual. They wish to improve their volumes, which are lower than they want them to be because of uncertainty around the referendum. This is good news for first-time buyers, home movers and those remortgaging as the mortgage market is set to become even more competitive” he adds.
The Bank of England yesterday kept its base rate to 0.50 per cent despite many analysts expecting it would be cut to 0.25 per cent in what would have been the first change in over seven years.