Consumer sentiment is improving but too late to save the government

With inflation falling to the target rate of 2 per cent last week, the big question is why has the Bank of England failed to cut interest rates? According to David Smith, Economic Editor at The Times: “Interest rates are coming down, whether the first move is in August or September – and that means better times lie ahead.”

In a piece for The Sunday Times on 24^th June David detailed “It would have been a shock if it had reduced rates on Thursday, exactly two weeks before the election. As a former senior Bank official observed to me, the government – by strangely claiming credit for the fall in inflation to 2 per cent, and by implication for interest rate cuts – raised the bar for rate reductions. Fortunately, or unfortunately, the details of the latest inflation figures provided the Bank with plenty of excuses not to cut rates on Thursday, even without the politics. Despite the drop in inflation to 2 per cent last month, services inflation, at a very high 5.7 per cent, was too strong for comfort. What now for interest rates? If 2 per cent inflation did not do it last week, will it in early August, the next decision point for the monetary policy committee? It is not as easy as it looks. It would be difficult not to cut if inflation were to have dropped below 2 per cent when the June figures are released next month. That though would be hard. The consumer price index (CPI) rose by 0.1 per cent in June last year and something smaller would be needed this time for inflation to fall. Even holding at 2 per cent could be a challenge. Does that mean we can say goodbye to an August rate cut? No, and the Bank left the door open last Thursday.”

In the meantime positive signs are coming from lenders this week who have started reducing their mortgage rates for borrowers including:

• Barclays on their 2 and 5-year residential fixed mortgages up to 0.28%
• Skipton on their 5-year residential fixed mortgages up to 0.20%
• HSBC across the board (residential / BTL) by up to 0.40% in some cases

And, what does this all mean for the local housing market – now and in the coming months ahead? The market remains very much price sensitive but sales can, and are, being swiftly achieved for our clients who are benefitting from our honest approach to valuation and our sales expertise to get the very best possible price for the property. Here’s some examples of our most recent sales which demonstrate our continued success in the local market currently across our three offices in Harrogate, Ripon and Wetherby.

5 Wayside Walk, Harrogate

Sold Stc in only 1 week

8 viewings – 3 offers

Barden House, Kirkby Malzeard

Sold Stc in only 2 weeks

14 viewings – 3 offers

49 Aire Road, Wetherby

Sold Stc in 8 days

2 viewings – 1 offer

If you’re thinking of selling your property give our teams a call today – valuations are free and we’d love to help get you moved.