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The Bank of England maintains interest rates at 5.25%

June 21, 2024

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Key Highlights

UK

The decision has been made to keep interest rates at their current figure, as the UK economy stabilises. The figure remains at 5.25%.

The Bank of England (BoE) announced this week that it will continue to maintain interest rates at 5.25%, despite inflation falling to its target of 2%. The Bank referred to it as a “finely balanced” decision. The main reason was to ensure that inflation remained at a low figure, holding the interest rates at 5.25% until the situation becomes more stable.

This was an outcome heavily predicted by major economists, and opinion is divided on how beneficial this continued freeze will be, leaving interest rates at the highest they’ve been in 16 years.

It is expected that rates will be cut in August, offering some reprieve for the housing market just around the corner.

The news of interest rates remaining the same has understandably been frustrating for the housing market, as more and more people have held off with buying and getting on the property ladder. It means that mortgage rates continue to be high and can even impact rental yields.

It’s not all doom and gloom, however. Though there is less of a buying demand, rental demand has stayed steady as people continue to rent their homes as they wait for interest rates to lower. This has offered stability and guaranteed income for landlords during a time of economic uncertainty. 

 

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