Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.

Bank of England Expected to Hold Interest Rates at 3.75% This Week

The Bank of England's Monetary Policy Committee (MPC) announces its latest interest rate decision on Thursday, with economists widely expecting the Bank Rate to be held at 3.75%. However, some committee members favour a rate rise, and mortgage rates have been climbing in the last 10 days. Letting agents and inventory clerks should watch both closely.

A Split Committee

Last month, the Bank held interest rates at 3.75%, but three members of its nine-strong MPC voted for an increase. Huw Pill, the Bank's Chief Economist and an MPC member, supports a rise, saying: "We cannot wait for uncertainties to resolve themselves before acting."

All 65 economists polled by Reuters this month said they expected the Bank to hold the rate this week. Nearly 90% expect rates to remain on hold for the rest of the year, with eight predicting a rise to 4%.

Mortgage Rates Climbing

Swap rates, which lenders use to determine the amount they charge for mortgages, have risen to a three-year high. Uncertainty in the international bond markets is driving the volatility affecting the loans market, and mortgage rates have been climbing in the last 10 days.

Housing Market Recovery Hopes Dented

Hopes of a mini recovery in the housing market appeared to have been dashed after the latest mortgage approval data showed a slump. Mortgages agreed decreased to 56,100 in July, down 2,100 from 58,200 the previous month, according to the Bank of England.

For letting agents and inventory clerks, the combination of a likely rate hold, rising mortgage costs and softer approval numbers points to continued pressure on the sales market. That backdrop may sustain demand in the rental sector.