Interest rates held

The Bank of England has opted to hold interest rates at 5.25%, ending a run of 14 straight interest rate hikes.

The surprise move comes after the inflation rate dropped to 6.7% in August, down slightly from 6.8% in July.

The Monetary Policy Committee’s decision was close, with five opting to leave interest rates unchanged and four wanting an increase of 0.25%.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The unexpected fall in inflation made this interest rate decision harder than it might have been. Last week it was an odds-on certainty that rates would rise by at least a quarter point but the climate has since changed.

“What it does show is that it is dangerous to make a snap decision based on one month’s figures and then regret it later.

“Stability is so important to the property market and brings confidence to buyers and sellers sitting on the fence finding it difficult to budget before deciding to make their moves. This hold, after many months of rises, will bring some welcome reassurance.’

John Anderson, chief executive of developer Allison Homes, said: “While we all want inflation to reduce further, the decision by the Bank of England not to increase interest rates further provides some much-needed optimism for homeowners and buyers.

“As the medium to long-term outlook remains positive, we are seeing average fixed-rate mortgages slowly reduce. However, it looks unlikely that rates will fall back to the perhaps unusually low levels seen over the past decade and the market, buyers and people remortgaging are beginning to adjust to this ‘new normal’.”