As widely expected, the Bank of England Monetary Policy Committee decided to keep interest rates unchanged at 4.75%.
Money markets had predicted that there was only an 8% chance of a rate cut at the last Monetary Policy Committee meeting of the year. 
Last month, the Bank of England cut its benchmark interest rate by 0.25 percentage points to 4.75%, marking the second rate cut since August, when it lowered the benchmark interest rate from 5.25% to 5%. Prior to that, the Bank of England raised interest rates for the 14th time in a row.
Commenting on today's decision to leave the base rate unchanged, Ross Turrell, Commercial Director at CHL Mortgages, said: However, with the CPI rising again yesterday and concerns lingering over the long-term impact of the Autumn Budget on UK inflation, a rate cut today was always unlikely.
He added: “This news may cause a negative reaction, especially among property buyers who are counting on lower mortgage rates.” However, Governor Bailey has strongly hinted that the benchmark interest rate could be cut by 1% over the next 12 months, which is likely to result in a significant increase in buyer demand and market activity in the new year. This is an exciting prospect and one that we as lenders should be prepared to respond to by working with brokers and their customers. ”
Paresh Raja, chief executive of Market Financial Solutions, said: “The Bank of England has long opposed interest rate cuts that are too rapid, and after the decision to cut the base rate in November, the MPC has decided to do the same today.'' It was always very unlikely that it would be lowered.” However, this should not be viewed negatively. Instead, we need to look at the big picture and reflect on the progress seen across real estate and lending markets in 2024.
“Yesterday's data from the ONS highlighted that house prices and rents are rising while interest rates are starting to fall and are expected to fall further next year. Meanwhile, from a political perspective Although the new policies are creating challenges for landlords in the private rental sector, the fact that a new government was formed in 2024 with a significant parliamentary majority has certainly brought stability after several years of turmoil. ”
He added: “Simply put, the market is in a stronger position today than it was 12 months ago, and this is laying the foundations for exciting opportunities for lenders, brokers and real estate investors alike in 2025.” he added.
Sam Lindsay, mortgage advisor at My Mortgage Angel, said: “All signs point to a cut in the benchmark interest rate, but not yet. With a pick-up in inflation and widespread anxiety around the world, the Bank of England will not cut rates further and wait until the situation stabilizes. I'm going to wait.
“However, this hold is only a temporary correction and we expect to see a slight downward revision in the first quarter of 2025, followed by a further gradual decline throughout the year.”
Simon Webb, Managing Director of LiveMore Capital Markets, commented: “For SVRs, trackers or first-time buyers hoping for another cut in bank rates, there will be no third time lucky this month. Given the coinciding rise in inflation, it is not surprising that the MPC voted against lowering the benchmark rate, at least for now.
David Hollingworth, associate director at L&C Mortgages, said: “Today's deferral decision is not a surprise, but the three votes in favor of a reduction this month will leave borrowers hoping for further positive developments next year. I think that will be encouraging.” Markets are betting that stubborn inflation could slow the pace of rate cuts, which is impacting fixed rate pricing. ”
He added: “While we expect mortgage lenders to quickly come out of the block in January and continue to price as steeply as possible, the central bank's tone remains consistent, with the pace of rate cuts moderating. This suggests that this is highly likely,” he added.
