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The cost of borrowing has now been frozen for three consecutive Monetary Policy Committee meetings and attention is turning to when rates will be cut.

Mortgage pricing has also been falling, boosting buyer budgets.

Frances McDonald, director of research at Savills, said the decision is likely to bring more confidence to the UK housing market. 

She said: “Over the past year, higher mortgage rates have led to price sensitivity and lower levels of transactions, and a market which had been dominated by cash and equity rich buyers.

“But although it looks as if interest rates have peaked, the first cut still looks someway off. That means heightened affordability pressures are likely to result in further but more modest house price falls.

“Savills expects the market to bottom out mid-way through next year as mortgage rates start to ease more significantly in anticipation of a base rate cut later in the year.”

She highlighted that some confidence has already returned to the market, adding: “More stability in the mortgage markets led to an improvement in activity levels in November. TwentyCi data for the month suggests that agreed sales - net of fall throughs - are back to within 3% of their pre-pandemic average, having lingered at around 15% below this level for much of the year.”

While lower rates will help the market, Nick Leeming, chairman of Jackson-Stops, said its agents are seeing buyer behaviour being driven by the right property in the right location, more so than any other defining factor. 

He added: “While local nuances are emerging due to supply levels, competition for prime homes that strike the balance between greater space and good connections will continue to drive activity and underline market confidence.”

Matt Smith, Rightmove’s mortgage expert suggested 20 consecutive weeks of steady average mortgage rate falls are giving confidence to those thinking of moving, although rates do remain at elevated levels.

He said: "The market opinion remains that base rate has reached its peak. The fact that swap rates – the underlying cost of mortgages to lenders - fell further after the latest UK GDP data was published yesterday, was another indicator that the markets were confident about how today’s announcement would play out.

“Many of the factors that contributed to the hold in September and November are continuing, and a flattened base rate, which could begin to fall in 2024, is looking increasingly likely. 
“The hold could provide some room for lenders to offer further mortgage rate drops – though it’s likely that lenders may hold back offering these to borrowers this side of Christmas, to take advantage of the seasonal jump in demand that usually happens in January”

Nathan Emerson, chief executive of Propertymark, added: "There is little denying this year has been extremely difficult for many, with a harsh mix of high inflation and elevated interest rates to contend with. There is no shying away from the fact many households have struggled to get by each month.

"With interest rates remaining unchanged yet again, Propertymark is optimistic the peak of the turmoil has passed, however, it may take a little time to see full momentum and confidence back within the housing market once again.”