The Bank of England has kept its base rate at 4.75%, delivering a widely anticipated decision that highlights ongoing caution around inflation. With rates now on hold, landlords and property buyers are looking ahead to 2025 with mixed expectations. While lower rates may be slower to arrive, experts suggest the property market remains on solid ground heading into the new year.
Mixed signals on interest rates
The Monetary Policy Committee’s decision to maintain the current rate came after a 6-3 vote, with three members advocating for a 0.25% cut. The move reflects a balancing act between controlling inflation and stimulating economic growth.
“There’s a chill spreading just before Christmas,” remarked Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown. “Interest rate cuts are on ice, and hopes for a rapid reduction next year have been dampened.”
Streeter noted that inflation remains a key factor. “The UK economy is contracting, but inflation is still expected to head back towards target next year. The inclement economic weather means we’re on a go-slow,” she explained. While this could benefit savers, Streeter warned, “it’s bad news for mortgage borrowers.”
Landlords remain optimistic despite challenges
For landlords, the hold on rates brings mixed emotions. Jonathan Samuels, CEO of Octane Capital, described 2024 as “a largely positive year for the property market,” but acknowledged the challenges posed by higher borrowing costs.
“We haven’t seen the base rate reductions many had hoped for, but we’re in a far better position than a year ago,” he said. Samuels urged buyers and landlords to maintain confidence, noting the resilience of the market throughout the year.
Ben Thompson, Deputy CEO at Mortgage Advice Bureau, echoed this sentiment: “We step into Christmas on the back of a positive year for buyers. Mortgage rates haven’t fallen as much as we’d like, but they’re far more affordable compared to 2023.” Thompson encouraged prospective buyers to act now, adding, “For those hoping to hang their stockings in their own home next Christmas, now is the time to get mortgage ready.”
What lies ahead for 2025?
Looking ahead, experts expect the market to build on its current momentum, especially as buyers look to complete transactions before the Stamp Duty hike in April. Kevin Shaw, National Sales Managing Director at LRG, expressed optimism about the early months of 2025: “I remain hopeful of an interest rate reduction on 6 February, which could keep the momentum going into the Spring market.”
However, Shaw was critical of the Bank’s approach, arguing, “The Bank of England has been too slow to act. A December rate cut could have brought much-needed seasonal cheer and helped boost the economy.”
Despite the hold on rates, mortgage lenders are already competing aggressively, creating opportunities for buyers. Shaw anticipates a “rush of activity in January” driven by New Year’s resolutions and the upcoming tax changes.
While the Bank of England’s cautious approach leaves questions about the pace of rate reductions, landlords and property investors can take heart from the market’s continued resilience. With lenders offering competitive rates and demand for housing remaining strong, 2025 promises opportunities for those ready to act.
