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Bank rate stays at 5.25% until summer at least - agency warning

Knight Frank says that the Bank of England base rate is likely to stay unchanged at 5.25 per cent for at least the next few months.

The agency says that the five rate cuts predicted for 2024 by financial markets in early January have become three as strong wage growth has kept inflation higher for longer, pushing mortgage rates up again. 

Knight Frank says: “As expectations of a cut move further into the distance, the result for the UK housing market is that more lenders have nudged mortgage rates back above 4.0 per cent in recent weeks. The five-year swap rate (the instrument used to price fixed mortgages of the same length) topped 4.3 per cent last Thursday morning, which compares to less than 3.6 per cent in the period between Christmas and the New Year. The word that comes to mind is ‘ouch’.”


A spokesperson for the agency adds: “The signs are positive and demand indicators are heading in the right direction ahead of the spring market. Many buyers are cautious about the wider economic environment and, as the last two months have reminded us, realistic pricing is key. We had quite high expectations just after Christmas, but the market has been a little slower out of the blocks than we anticipated. 

“We had strong expectations towards the end of 2023, however the market has been slower out of the blocks than anticipated. The signs are pretty clear though that this year will be stronger than 2023 with offer levels up and buyer sentiment improving.”

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  • Matthew Payne

    Your forecasts have been pretty wide of the mark on house prices for quite some time, like many others to be fair, but I dont see what the point of a published forecast like this on the movement of the base rate or house prices for that matter. The global economic environment is so fluid and changeable that the forecast has validity for a few days max before events overtake it, and we only need another poor set of retail figures which seem almost guaranteed for it to go in the bin.

    The economic data on spending etc looks dire, businesses are folding hand over fist, job lay offs are accelerating, the prospect of a deep, hard recession increases as every month passes, all made worse by the record profit making banks all cashing in last week (bar Halifax) cynically increasing mortgage rates simply based on negative mood music like this. It would be a brave or stupid BoE to let rates stay at 5.25% for at least another few months as you claim. A change of direction is required at least, a simple first cut or two, to get these same banks to spectacularly slash their rates and have them squabbling for market share. At least then the conversation changes from the up we have had for 2 years, to the plateau we are now stuck on to a climate of down. The difference between 5.25% and 5% is far greater than 0.25%. Maybe the Halifax agrees with me.


    Well said Matthew. The muppets at the B of E without doubt have made things worse. The base rate should be a whole 1% below what it is currently. That said they cannot rush out and change this as it would send the wrong message.
    There is a very fine balance currently, they must drop the rate next time by .25% and then leave it for around 3 months to allow feedback from the change.
    Stupidly when they kept putting rates up every time and not giving pause will cause businesses to go bust and for some to lose their property. Without doubt, in my opinion, they are culpable.

  • Sarah Fox-Moore

    Interest rates & the base rate are going no where any time soon.

  • icon

    I think mortgages will be 0.5 to 0.75% lower in 6 to 9 months time, and probably also BOE base rates.

    IF BOE doesn't do this then the mortgage companies will do so to generate new business.

    Savings rates are already dropping. Nationwide has removed its 8% regular savings deal and one year regular savings plans coming to maturity are being replaced at lower rates by most banks and building societies.

  • icon

    Recession lol have you seen how many people are out in restaurants and at football stadium's
    At the weekend's and midweek


    They can't be that hard up can they ?


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