The Bank of England has held the Base Rate at 3.75%, maintaining its cautious approach as it continues to assess inflation and the wider economic outlook.
While some buyers and sellers may have hoped for a cut, an unchanged rate provides continuity after months of economic and geopolitical uncertainty.
It’s also welcome news for a housing market that is gaining momentum.
Chestertons’ August data recorded the strongest performance for sales portal enquiries in ten months, indicating that more prospective buyers are beginning their property searches.
Vendor instructions also increased by 14% year-on-year as more London homeowners brought their properties to market ahead of the autumn selling season.
Chestertons continued to outperform the wider market across its operating postcodes. Data from TwentyEA shows that new instructions to Chestertons increased by 63.9% year-on-year in August, while the wider market declined by 9%.
Sales agreed by Chestertons also rose by 7.8% compared with July, against an 18.1% decline across the wider market in its operating areas.
The latest national figures also point towards a market that is gradually finding its footing.
Zoopla reports that searches for homes are now 7% higher than a year ago, their strongest annual performance for 12 months. Although sales agreed remain 6% below last year, this gap is beginning to narrow.
Buyers also have 5% more homes to choose from than they did a year ago. This is positive for people searching for a property, but it means sellers must remain realistic about price and presentation if they want to attract serious interest.
The August RICS Residential Market Survey tells a similar story. Its measure of new buyer enquiries improved for the fifth consecutive month, reaching its least negative reading since January. Agreed sales also moved further away from the lows recorded earlier in the year, while expectations for sales over the coming 12 months became more positive.
The Base Rate influences mortgage pricing, but it does not determine every mortgage rate directly. Fixed-rate mortgages are largely priced according to financial market expectations, including swap rates, so lenders can change their products even when the Bank of England makes no change.
Today’s decision therefore does not guarantee that mortgage rates will remain at their current levels. Buyers approaching the end of a mortgage deal, or planning a purchase, should review their position carefully and take independent mortgage advice rather than waiting for a future Base Rate cut.
Henry Knight, Managing Director of Chestertons’ recommended mortgage partner, Springtide Capital, comments:
“Lenders still have a strong appetite to lend and continue to compete for the right borrowers. The Chancellor’s commitment to fiscal responsibility is encouraging, but markets will want to see that reflected in the budget.
“Buyers are becoming more pragmatic, choosing a mortgage that works for them now while retaining the flexibility to review their position as conditions change.”
Greater interest-rate stability may help some prospective buyers plan with more confidence, but affordability remains central to purchasing decisions.
Buyers have more choice and negotiating power than they did in many recent markets. Those who have their finances arranged and understand their priorities will be in the strongest position when the right home becomes available.
For sellers, increasing demand does not mean that every property will attract an immediate offer. Buyers remain selective, making an accurate initial asking price, strong presentation and a properly targeted marketing strategy particularly important.
Adam Jennings, Head of Residential at Chestertons, says: “Although buyers would naturally welcome lower borrowing costs, keeping the Base Rate unchanged provides a degree of stability at a time when confidence is beginning to return.
“Our August figures show a clear improvement in buyer enquiries and sales agreed, while more homeowners are choosing to bring their properties to market. This is consistent with the wider picture from Zoopla and RICS, which suggests the market is gradually moving away from the subdued conditions seen earlier in the year.
“London buyers remain price-conscious and have plenty of choice, so sellers need a strategy that reflects current demand in their area. With more than 35 offices working as one network, our teams can provide clear, practical advice on pricing and how best to position a property for the autumn market.”