The mortgage industry is disappointed, but not surprised, and is currently seeing the Bank of England hold interest rates today.
In the minutes of the meeting, the committee noted that inflation rate had lowered from its peak of 11.1% in October 2022, following the shocks caused by the pandemic and supply chains.
But adding that the cost of living is 3.8% in August, “it is expected to increase slightly in September before falling to the 2% target”.
The committee “is alert to the risk that temporary inflation increases may put additional upward pressure on the wage and price setting process.”
Annual wage growth does not include bonuses, with bonuses from May to July this week at 4.8%, slightly lower than 5% in the previous three months.
The minutes added that the base GDP growth rate in July was zero in July after an increase of 0.4% in June, “still gentle, consistent with the continued gradual loosening of the labor market and the low economy.
“There are still domestic and geopolitical risks surrounding economic activity.”
Frances Haque, chief economist at Santander, has little hope for a lower base interest rate this year.
“The minutes show that the standards for further bank interest rates are still high this year,” Hack said.
“However, the mortgage market continues to show resilience – with approval of holding companies last week, the overall market size increased significantly.
“Together with office data from national statistics, it shows that home prices have slowed down, mortgage pricing remains at recent lows, and conditions this year seem to support buyers firmly.”
However, SPF private client CEO Mark Harris is in the case of lowering the tax rate.
“With speculation surrounding the property taxes that may be introduced in the November budget, leading to discretionary buyers and sellers, sellers have adopted a “wait and see” approach, and cutting tax rates will be the arm of the housing market,” Harris said.
“Now that the stamp duty concession has ended, despite the reductions of five times in the past year, as affordable problems persist, it is necessary to not only increase the housing market but also increase the broader economic costs.”
Paul Broadhead, head of mortgage and housing policy at the Association of Building Associations, added: “For many possible first-time buyers, another cut to bank taxes is not fast enough.
“While innovative mortgages have been obtained from building society to help those with smaller deposits, recent regulatory changes have given lenders the flexibility to lend to more borrowers, mortgage affordability remains one of the biggest barriers to home ownership.
“Our research shows that 61% of first-time buyers cite this, up from 18% of new buyers paying off their mortgages five years ago, rising from 18% of revenue to 22%.
John Charcol mortgage technology manager Nicholas Mendes believes that the bank sitting in his hands will mean the movement of mortgage pricing.
“The shelving has already paid, so I don’t expect I’m going to see a significant reduction or a new wave of competitive repositioning before the next few meetings.
“With swaps and flow, the best fixed prices may only be moderately adjusted, while the tracker for the day remains unchanged.”
MPC also voted 7-2 to reduce the number of shares purchased by government bonds for monetary policy purposes to £70 billion in the next 12 months to £488.8 billion.
Seven members – Andrew Bailey, Sarah Breeden, Megan Greene, Claire Lombardley
Two members – Swati Dhingra and Alan Taylor voted to cut bank interest rates by a quarter to 3.75%
