Leaders Romans Group responds to the BoE decision to maintain interest rates

At LRG we’ve had a strong start to 2025 but we are aware that the increased sales figures (year-on-year) are in part at least, due to a rush to beat the imminent Stamp Duty increase.  

Across the wider economy a loosening of monetary policy would have counter-balanced the recent fiscal tightening of which the Stamp Duty change is a component.  

With the ECB’s interest rate now at 2.5% after a further reduction last week, the gap between the Bank of England and the ECB rates is continuing to widen. Additionally, few mortgage deals are currently below 4%. The MPC was too slow to put rates up in 2022 and is increasingly looking too slow in reducing them now. 

The government’s favourite word seems to be growth, and yet in the wider economy growth seems nothing more than an aspiration. To seriously changes things up – specifically in housing delivery – monetary policy must align with the government’s objectives. 

The current level of interest rates act as a handbrake on future growth. Take the handbrake off and the housing market and economy will gain some momentum.

With monetary policy having failed to mitigate the increased cost of buying a home (due to the rise in Stamp Duty), we are looking to next week’s Spring Statement for the Government’s next move.