The Bank of England has held interest rates at 5.25% – the fifth pause in a row.
The Monetary Policy Committee voted eight to one in favour of maintaining its base rate at its 16-year high.
The decision came the day after lower-than-expected inflation figures, with the Consumer Prices Index (CPI) at 3.4%.
Sarah Olney MP, Liberal Democrat Treasury spokesperson, said of the decision: “This is cold comfort for millions of homeowners who still face massive hikes in their mortgage bills after Liz Truss crashed the economy. Many families still face a mortgage cliff edge despite this news.
“This Conservative government has no good story to tell on the economy.
“The only way to break this cycle of stagnation and financial hardship is to kick this out-of-touch Government out of office. Rishi Sunak needs to stop his desperate attempt to cling on to power and call an election.”
David Hannah, group chair of Cornerstone Tax, said: “2023 was an extremely turbulent year in the UK property market, with successive interest rate increases and a generally hawkish approach to the control of inflation by the Bank of England. Emerging trends indicate that the BoE may have overcompensated at the expense of the property market.
“February’s inflation figures and mortgage approvals should indicate an overall cooling-off of the UK economy, which must be acknowledged by the BoE and, in an effort to avoid a sudden crash of inflation, will increase pressure on the MPC to start reducing interest rates sooner rather than later.”
Matt Smith, Rightmove’s mortgage expert, said: “Although today isn’t the day for the first base rate cut, each day that passes is one step closer, and it’s very much a ‘when’ rather than ‘if’ we see the first drop from 5.25%.
“Mortgage rates have risen slightly over the last six weeks, but it does feel like the pressure on lenders to increase rates has dissipated, with some lenders having already cut rates in response to yesterday’s positive inflation news. This may mean that average mortgage rates start to fall back in the next couple of weeks. If this is the case, it will be first time average rates will have reduced in over a month.
“Homemovers shouldn’t expect to see a rush of rate cuts, but the two announcements this week should hopefully continue to give movers more confidence than they perhaps had at the start of last year. That’s certainly been the theme so far after the first quarter of the year – with more people enquiring to purchase homes, more sellers come to market and more sales being agreed than this time last year.”
