The Bank of England has held interest rates at 4.25% following their latest review on Thursday. While a rate cut was not expected, property investors may have hoped for further stimulus for the property market. But with further cuts in the year hinted at by the Bank of England Governor, is now a good time to invest or is it better to wait? In this article, we will break down the Bank of England’s decision, assess the market reaction, and explore what this means for property investors.
Why Did The Bank Hold The Rates?
According to the deputy governor of the Bank of England, Clare Lombardelli, interest rates were held due to ‘uncertainty’ facing the UK economy.
With the recent spike in inflation in April and May, and the ongoing conflict between Israel and Iran, the Bank has made a cautious decision to maintain rates and see how the UK’s economy develops over the next six weeks.
Inflation was recorded at 3.4% in May, above the Bank’s target of 2% and the highest for over a year. The recent conflict in the Middle East also threatens to increase energy costs and prices, due to Iran’s role as a major oil producer and the potential limiting of supply from the country if the conflict escalates.
Read this article to find out more about how inflation influences the property market.
What Does The Future Hold For Interest Rates?
Bank of England Governor, Andrew Bailey, previously stated that we would see interest rates be gradually cut over the year as the UK’s economic picture brightened. Bailey has maintained that this will remain the case and that interest rates are on a ‘gradual downward path’, suggesting that further rate cuts could come in August.
However, the Governor has been keen to insist that the world is ‘unpredictable’ in this latest rate cut. Bailey’s comments suggest that the Bank is prepared to increase interest rates if inflation continues to increase and the global economy experiences a downturn.
How Has The Property Market Responded?
Despite the decision to hold rates, the reaction from the property and mortgage sectors has been largely positive.
Matt Smith, Mortgage Expert at Rightmove, noted:
“Today’s hold was widely anticipated… We’re broadly where the markets expected us to be at the start of the year in terms of inflation and rate cuts. Average rates have been flat, but competition among lenders is increasing.”
Frances Haque, Chief Economist at Santander UK, added:
“Many lenders, including Santander, have reduced mortgage rates over the past week. We anticipate two more base rate cuts over the next year, likely ending 2025 at 3.75%. These expectations are already being factored into current mortgage products.”
Ben Thompson, Deputy CEO at Mortgage Advice Bureau, echoed this sentiment:
“There are still many positives. From 100% lending options to mortgages that stretch your borrowing power, there are many accessible routes onto the ladder – regardless of your income or deposit size.”
How Should Property Investors Respond?
During uncertain economic times, it is important to not make impulsive, hasty decisions, but it is equally important to not miss current opportunities by waiting for the ‘perfect’ moment. Perfect never arrives.
While interest rates may fall later in the year, the current buy-to-let mortgage rates on offer by major lenders are already very competitive. Almost all major lenders offer fixed-rate buy-to-let mortgages under 4%. For example, HSBC offers a 3.76% two-year fixed-rate deal, which is particularly attractive to buy-to-let investors.
If the rates increase in response to the broader economic landscape, similar mortgage deals may become less accessible as lenders reprice. With regions like the North West offering high potential due to its lower-than-UK-average property prices and high capital growth forecasts, this could be an ideal time for investors to capitalise. For example, Liverpool’s average property price is £183,000, a 14.8% increase from the previous year, and the region as a whole is forecast 29.4% growth by 2029.
By waiting for the perfect conditions that might never arrive, you can miss out on what is good now in the current market.
Still unsure about what to do? Read our article discussing if you should fix your buy-to-let mortgage.
Navigating an Evolving Property Market
It can be difficult to know when to invest. Timing is everything. Economic conditions are fluid, and the perfect moment to invest becomes clear only in hindsight. Today’s combination of stable buy-to-let mortgages, strong regional market opportunities, and the current interest rate make this one of the most promising periods of property investment in recent years.
Speak to Advantage Investment’s Property Investment Experts
If you would like to discuss the current market and the opportunities available, contact us today for a free consultation. We will provide you with a fresh analysis of the market, pin-point what type of property investment is best suited for you, and identify the most-rewarding market opportunities available to you.
Through our 360-degree approach to investment, we guide you all the way from the initial identification of the property and sourcing the correct financing, all the way to management of your investment in the long-term.
Starting making the steps toward a financially prosperous future today with Advantage Investment.
