The hold in base rate is a disappointment, but there’s much to be said for certainty and predictability.
On the 5th February, the Monetary Policy Committee (MPC) confirmed that the Bank of England base rate would remain at 3.75% for the second month. After a larger than expected rise in inflation in December to 3.4%, this move was widely anticipated, but it has created questions about when – and how many – cuts could be expected over the next 12 months.
While further base rate decreases are certainly desirable for the property market, Managing Director of Auction House, Oliver Prior, believes that predictability will still have a positive impact.
“A back-to-back cut was never really on the cards,” commented Oliver. “The last time we had sequential base rate cuts was following 2008’s financial crisis, when the market desperately needed stabilising. Sticky inflation of 3.4%, which remains well above the Bank of England’s target rate of 2%, means it’s no great surprise that the MPC has chosen to hold fast with the base rate.
“While it would be easy to be gloomy about this announcement, there’s still room for optimism. Confidence in the market will continue to build as a consequence of this base rate stability. Certainty and predictability underpin market confidence. The greater the confidence, the greater transactional activity will likely be, which will deliver market growth.”
The pace and extent of cuts is now a hot topic for debate, but the MPC’s decision is likely to hinge on the effects of both national and international activity. The US Federal Reserve, for instance, will likely lower their rates, which may impact the UK’s tolerance for further cuts. However, it will most likely be inflation, wage growth and the job market that will determine the MPC’s decisions going forward.
“Domestic and global factors will play a part over the next 12 months,” said Oliver. “Nevertheless, we still anticipate that further reductions will take place over 2026. These cuts will be measured and cautious, giving the property market a solid and dependable footing upon which to grow.”
About us
We are a national brand with a local presence. We operate across England, Wales, Scotland and Northern Ireland, holding close to 200 online, livestream and in-room auctions every year.
Despite being a nationwide brand, we pride ourselves on maintaining a regional presence. With local, knowledgeable teams, we offer a truly personalised service to sellers, buyers and partners alike.
