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Riding the Bank of England’s Interest Rate Rise

Sara NewsonBy Sara Newson on 25 September 2023

Anyone who knows me will know I love an analogy. When I saw the news of the increase in the Bank of England’s interest rate rise last month, one of my favourite analogies came up… 

I know this might not be the news we were hoping for, but think of it like riding a horse.

So, saddle up and explore my thoughts and feelings about the increase of the Base Rate by 0.25%. 

Controlling the Reins and Leg

In the world of property and the economy, it’s like we’re all on a grand equestrian adventure. The people in charge of the country are akin to skilled riders, and they must master the art of controlling the horse.

Picture this: they’re holding the reins, maintaining contact with the horse’s mouth to ensure it doesn’t gallop too fast. At the same time, they’re keeping their leg on to ensure we keep moving forward steadily.

It’s a delicate balance. Too much pulling back on the reins, and we risk slowing down the horse, which isn’t great for anyone. But if we let the horse run wild, well, that can lead to chaos. 

The Need for Rate Rises

Now, here’s the wisdom in the Bank of England’s decision. Think of it as them gently pulling on the reins to keep the market from racing ahead too quickly.  If the market is rising too quickly (rapid inflation) then they see the need to pull more firmly on those reins – increasing the base interest rate more steeply and quickly to bring the horse back under control.  At the time of writing they have steadied the horse but they need to maintain it, which is why we are seeing them keeping contact on the mouth with very small increments but the leg is also being kept on – with things like new products for first time buyers being released simultaneously.

Imagine if they hadn’t taken this step. A large proportion of people would have felt it was safe to release their own reins and start spending again (further increasing inflation), and the market would have gone on a wild ride, much like a spirited stallion. People would have rushed out to buy, and the gap between income and cost of living would have further increased. 

So, what they’re doing is maintaining a steady pace, keeping us in check for a while. This rate increase acts like a gentle pull on the reins to guide us towards a more sustainable and balanced property market. 

The Ride Continues

Remember, the property market, like a horse ride, has its ups and downs. It could be a better science, and there will always be fluctuations. But this rate increase is a calculated move to ensure long-term stability. 

If they had let the horse gallop freely now, the excitement of buying property would have been short-lived, and we’d be facing further rapid house price increases (making owning a home more and more difficult). Instead, they’re keeping things in check, allowing us to enjoy a steady and reliable journey in the property market. 

P.S. The rapid inflation was needed to help corrode the debt we (the country) took out during the pandemic!

Your Property Partner

At REALM 47, we understand the art of navigating the property market. Our team of experts is here to provide you with the guidance and support you need to thrive in this equestrian adventure of property investment. 

So, if you’re looking for a trusted partner in your property journey, don’t hesitate to reach out. We’re here to help you maintain that perfect balance, ensuring your investments move steadily towards success. 

Stay tuned for more insightful updates from REALM 47, your trusted companion in property investments!