Not Just Yet: Making Sense of the Noise.

As we stepped into the new year, the gap between an excitable market and the cautious stance of central bankers was quite noticeable. Headlines shouted about imminent rate cuts and a swift return to normal inflation levels.

“Rate cuts by the spring”, “Inflation back to target by March, the end is nigh” - commented industry analysts.

However, as we've seen, reality has a way of adjusting expectations. Mortgage rates have been steadily rising. It seems both the market and the Bank of England are slowly inching closer to agreement on rate expectations. The final mile was always going to be the hardest, even after the better than expected inflations numbers yesterday.

Despite losing a certain amount of credibility in foreseeing the inflationary turmoil, the Bank of England is now only focused on its target, getting inflation back to 2% and keeping it there. The message from the MPC? To hold steady. While this might frustrate politicians, estate agents, and borrowers alike, the Bank is more likely to hold rates higher for longer, rather than bow to political or economic pressures to reduce now.

What does this mean for you? If you're planning or needing to borrow, our advice is simple: Start early and stay alert. Make sure you and your advisor are monitoring the ongoing situation, ready to respond to change. Long term projections can change rapidly and what seemed right a month ago may not be the forward now. Our clients will attest that we work tirelessly to adjust to the shifting environment, ensuring they always walk away with the right deal for them.

On the upside, alongside positive numbers here at home, recent data from the U.S. indicates a weakening in their job and consumer markets. This gives the Federal Reserve some wiggle room to adopt a more lenient stance. Since the Americans have been ahead of the UK in these matters, this could herald a shift for the Bank of England too, paving the way for easing the restrictive financial environment we've been in for the last couple of years.

For prospective buyers, the long wait for rate cuts means the real estate market, especially in prime areas, is likely to remain subdued. Most are adopting a 'wait and see' approach. Any big moves from anyone? Not just yet.

At Anderson Harris, we're here to guide you through these fluctuating times with expertise and a touch of humour. Stay tuned for more insights, and remember, we're always here to help you navigate the ever-changing landscape of finance and property.

Anderson Harris Team

21st March 2024