The Bank of England has voted to hold the base rate at 5.25%.
Following 14 consecutive rises, beginning in December 2021, this is the first time in nearly two years that the central bank has voted to maintain the base rate at its current level.
The Monetary Policy Committee (MPC) voted 5-4 in favour of the decision.
This move followed encouraging inflation figures released by the Office for National Statistics (ONS) yesterday with saw inflation fall by 0.1% to 6.7%.
Despite fears of an incoming recession, the decision by the MPC points to a slow economic recovery following months of turmoil, which saw inflation peak at a 40-year high of 11.1% in October 2022 and the ongoing cost-of-living crisis put increasing financial pressures on families across the UK.
For homeowners and mortgage brokers, the decision comes as a sigh of relief following months of soaring mortgage rates and affordability concerns.
Reaction:
Posting on TikTok, Emma Jones, managing director at Whenthebanksaysno:
@whenthebanksaysno Mortgage rates #bankofengland #mortgageuk #whenthebanksaysno ♬ original sound – When The Bank Says No
Nicholas Mendes, mortgage technical manager at John Charcol:
“Yesterday’s unexpected inflation announcement for August eased some of the pressure on the Bank of England.
“Core inflation, which the Bank of England pays close attention to, fell to 6.2% from 6.9%.
“Moments after yesterday’s inflation announcements market expectations of a rate rise began to plummet.
“This is a nice change compared to recent months when you could be certain of the MPC announcement at the beginning of the month.
“There has been a steady decline in swap rates in recent days, which has resulted in many lenders reducing rates on both residential and buy-to-let products – which is welcome news for mortgage holders.
“Whether today’s hold is a sign of the Bank’s long-term plan remains to be seen.”
Sarah Pennells, consumer finance specialist at Royal London:
“After consecutive interest rate rises, this is a welcome pause for borrowers.
“Those on a tracker rate for their mortgage will doubtless be relieved that they will not see another rise in their repayment amounts.
“However, today’s decision by the Bank of England to leave the Base Rate at 5.25% won’t help people whose current fixed rate mortgage is near its end, as they’re likely moving off a rate that was cheaper than the new fixed rate deals available.
“For some, these higher repayment amounts will be unaffordable or a huge stretch on their finances.
“Although savings rates have been getting higher, with best buy easy access accounts paying over 5%, they have not kept pace with the rises in the Bank of England base rate.
“It’s vital that savers shop around to see whether there is a better rate available for them.”
Rob Clifford, chief executive of mortgage and protection network, Stonebridge:
“I would think that yesterday’s inflation figures – showing a surprise drop, albeit a relatively small 0.1% fall to 6.7% – have swayed enough members of the MPC to think that a further rise in Bank Base Rate was worth putting off right now, given the impact any further rise would have, particularly on mortgage costs, but also other forms of debt which track BBR.
“As a business that arranges over 80,000 mortgages a year, we see the real and harsh impact of affordability pressure affecting thousands of borrowers, and while this decision does not necessarily mean we are at ‘peak BBR’, after consecutive rises in BBR, it does at least feel like we are nearing the top.
“In the mortgage market, some of the very largest mainstream lenders have dropped their rates recently, but one suspects this is less to do with BBR or indeed swap rates, and more to do with a need to secure business volume in a market which is very reliant on remortgage and product transfer business.
“We are seeing encouraging and consistent volumes of purchase cases, but more broadly in the market, purchase transactions are clearly significantly down on the prior year, and it will need more than a decision to hold BBR to inject some life into it – the calls for Government intervention here are only likely to grow louder.”
Posting on Instagram, Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
Steve Seal, CEO, Bluestone Mortgages:
“Consumers and borrowers across the country can finally let out a huge sigh of relief as interest rates remain unchanged at 5.25% after 14 consecutive months of rate rises.
“This combined with the return of rates below 5% indicates that we may have turned the corner and should give borrowers a boost of confidence.
“For those worried about keeping up with their mortgage payments or looking to take their first or next steps onto the property ladder, rest assured that there is help at hand.
“No matter someone’s circumstances, mortgage brokers and specialist lenders can cater to their needs, making it possible for them to achieve their homeownership dreams, where previously they thought it not possible.”
Andrew Gething, managing director of MorganAsh:
“Following the recent inflation news, it was interesting to see the consensus quickly shift from another rise to a long-awaited pause to interest rates.
“At long last, it is some much-needed relief for those borrowers sat on tracker or variable rate mortgages – often through circumstance, such as elongated transaction times, remortgage process or a sale falling through.
“Despite the positive news, the chancellor was quick yesterday to highlight we are not out of the woods just yet.
“Although mortgage rates have improved significantly, the monthly payments for those remortgaging, or taking on a new fixed rate, are still much higher.
“We are seeing the strain this is causing in the rise in arrears. High food and fuel costs are also hitting household budgets.
“Consumer Duty reminds us that we must be there for those clients who are feeling this heavy burden and are in a vulnerable position.
“Without the correct systems in place, it’s not only impossible to identify these customers, but it is unlikely they will the achieve the good outcomes required by the regulator.
“We’ve seen many firms – including lenders and providers – break cover with support for vulnerable customers.
“In reality, many of these approaches still leave huge blackspots for bad outcomes – particularly in how they identify and communicate with vulnerable customers. In its latest ‘Dear CEO’ letter, the FCA has said it has already taken supervisory action against firms with weak identification of vulnerable clients.
“As more clients potentially fall into this category, this must be addressed.”
Posting on TikTok, Riz Malik, founder and director of R3 Mortgages:
@riz_talks_money Bank of England holds rates #fyp #fypシ #property #ukpropertyinvestment #ukpropertyinvestment #personalfinance #mortgage #southend #mortgage #moneytok #interestrates ♬ original sound – Riz
Vikki Jefferies, proposition director at PRIMIS Mortgage Network:
“Today’s decision by the Bank of England will be a welcome relief for borrowers already struggling with the cost-of-living crisis and high interest rates.
“This should accelerate the price war, which has seen mortgage providers lower mortgage rates to stay competitive in recent weeks, with fixed mortgage rates dropping below 5% in some cases.
“Nonetheless, rates remain significantly elevated when compared to the rock-bottom rates of recent years, and brokers will need to help consumers adjust their expectations of what a ‘new-normal’ for interest rates may look like.
“It’s unlikely that rates will return to the historic lows of one and two percent any time soon, and this should now be factored into any decisions about affordability moving forward.
“However, this is not to say that rates will not come down further, and brokers should seek to provide education and context to empower consumers to make informed decisions around products, particularly as the rate landscape continues to evolve.”
Paresh Raja, CEO of Market Financial Solutions:
“It was a close call, and a welcome surprise for most.
“By and large, lenders had expected – and priced in – another 0.25% hike today, so this decision will inject a little more spark into the market.
“Indeed, even with the expected hike, rates had stabilised in recent weeks, with the lending industry increasingly confident that we’ve reached the top of the interest rate hill that has been climbed since December 2021.
“Still, there will be a natural period of adjustment in the months ahead.
“Looking at the bigger picture, a base rate of 5.25% is not abnormal, but borrowers had grown accustomed to a period of record-low rates.
“As we are now less likely to see any notable swings in the base rate, house prices will likely settle as buyers can establish what their real spending power is.
“Lenders and brokers must be proactive in helping in that regard – providing clarity and assurance to borrowers wherever possible, allowing them to enter the property market with confidence.”
Gordon Milnes at Investec Real Estate:
“Boosted by yesterday’s surprising inflation figures, this is the absolutely the right decision in the face of recent economic data.
“Hopefully the Bank of England can hold their nerve and this is the peak, which will be a welcome boon for investors, developers and lenders.
“Now we need some further visibility on potential interest rate cuts, which should act as a catalyst for a rapid bounce back in real estate activity levels.”
Posting on TikTok, Andrew Montlake, managing director at Coreco:
@mortgagementormonty #bankbaserate #interestrates #inflation #swaprates #mortgages ♬ original sound – Mortgage Mentor
Paul McGerrigan CEO at Loan.co.uk:
“After 14 rate hikes, the MPC has finally paused, reflecting no doubt, on the recent 0.7% dip in core inflation and the cry’s for a breather to assess the impact of their actions.
“Global tensions, like the Ukraine conflict and reduced oil production, remain economic threats.
“Current SVR and tracker rate holders are relieved, and we hope for decreasing interest rates by year-end, potentially boosting the property market and staving off recession.”
Arjan Verbeek, founder & CEO of Perenna:
“Although we have seen signs of stability today, it doesn’t take away from the uncertainty many homeowners have experienced over the past few years with 14 successive rate hikes previously.
“First-time buyers continue to struggle with affordability and those coming to the end of their short-term fixed rate mortgages, on trackers or SVR, have had to grapple with the worry of whether interest rates are going to increase and if they’ll be able to afford their mortgage payment.
“European counterparts, such as Denmark, rely on mortgage banking models which are long-term, fairly priced, and create an affordable housing market.
“These markets, and the preference towards long-term fixes, have consequently avoided such mortgage volatility for homeowners.
“The UK mortgage market needs to change. Lenders, regulators and the Government need to begin placing the same weight and importance behind long-term fixed mortgages as they do short-term.
“Wider macro-economic volatility still exists, and while today’s decision will be a relief to most, providing borrowers with a greater choice of long-term fixed mortgages to avoid such volatility is clear.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Following better-than-expected inflation figures, the Bank of England has made the wise move to halt the consecutive rate hikes and give them time to do their job.
“Consecutive rate rises have been painful; it’s time to leave alone for now, rather than causing continued anxiety and distress for borrowers.
“Many lenders have substantially reduced their fixed rates in the past few days and weeks on the back of calmer Swaps, which underpin the pricing of fixed-rate mortgages.
“While the days of rock-bottom mortgage rates are long gone, we expect pricing to improve further over coming weeks and numerous sub 5% 5-year fixes to come to the market.
“Supply is outstripping demand, which will drive down rates and swaps, while still a little volatile, are trending downwards.
“While we know this can all change again on the back of negative data, for now the outlook is much more promising than it was three months ago.
“Borrowers due to come off cheap fixes still face a payment shock, so it is important to plan ahead as much as possible and act now.
“Rates can be booked up to six months before you need them so speak to a whole-of-market broker as to what’s available.
“If when you come to remortgage rates are cheaper, borrowers can choose another deal.
“Many borrowers are opting for shorter-term fixes or base-rate trackers with no penalties in the hope that they can fix for longer once rates become more palatable.”
Thomas Davies, MD at mortgage broker Alexander Hall:
“Borrowers will be pleased that the Bank of England has decided not to increase rates, and this will only serve to reinforce the positive news that mortgage prices are falling as cooling inflation and the reduction in swap rates bring some needed respite.
“With markets anticipating that the Bank of England has neared the top of its rate increases, and available mortgage deals exceeding 5,000 for the first time since May, borrowers should take comfort in the fact that mortgage products are becoming more palatable.”
John Phillips, CEO of Spicerhaart and Just Mortgages:
“Like many, my expectation was that the Bank of England would follow the European Central Bank and go for one more increase.
“However, I’m delighted to be proven wrong and see the MPC hold rates instead.
“This will certainly be a positive for mortgage holders, borrowers and the general public who have been demoralised by fourteen straight interest rate rises.
“While yesterday’s good news on inflation certainly made the pause more palatable for the MPC, there’s no question high household costs – particularly fuel, food and energy, still present a challenge.
“As a result, affordability will remain a clear obstacle for both borrowers and brokers.
“Brokers will continue to play a critical role by using all the tools available to help clients make the numbers work, whether that’s the many households still set to remortgage or those that need to move.
“Lenders have played their part in recent weeks to reduce rates considerably and news of stability in interest rates may allow lenders to loosen the purse strings a little further.”
Tony Hall, head of business development at Saffron for Intermediaries:
“Assuming that the mortgage market and wider economy aren’t subject to any more nasty surprises, we might expect interest rates to stay at a similar level for the foreseeable future.
“We know that markets thrive on certainty, and while this has been notably absent in our sector in the past three years, I am hopeful that the final quarter of the year will be characterised by more stability.
“We are seeing inflation fall marginally and if the rate continues to trend in this direction, we could see slight reductions to interest rates over time.
“The larger lenders may also start to compete on the pricing of fixed rate deals to ensure they finish the year with a flourish.
“Predictions aside, borrowers will need to adjust to this new higher rate environment, and advisers are tasked with helping them with this crucial transition.
“We are firmly within a ‘new normal’ and should not expect a return to rates in the region of 2% any time soon.
“The role of the adviser in anticipating, educating, and mitigating the risk of payment shock is huge here, particularly for those customers who might have locked into a sub-1% deal as little as two years ago.
“While the outlook does provide hope, there is no doubt about the challenges that our market currently faces.”
Will Hale, CEO of Key:
“Today’s Bank of England announcement to keep the base rate at 5.25% is welcome news, and hopefully means we’re nearing the peak of the interest rate cycle.
“However, high interest rates continue to put financial pressure on mortgage borrowers who are either stuck on variable rates or who are coming to the end of fixed term deals and looking to remortgage.
“For older borrowers, some of whom are trapped on a lender’s standard variable rate (SVR), this pressure is even greater.
“Although we have seen some mortgage rates fall over the last month, the average SVR earlier this week was 8.09% and despite the Government Support Measures that some homeowners receive, many will face difficult decisions given the continued cost-of-living crisis and with limited prospect of any meaningful increase in income through their retired years.
“However, the positive news is there are always options for older borrowers to consider and as the later life lending market evolves, there is more flexibility and choice now than there has ever been when it comes to using housing equity to navigate through retirement.
“Rates in the equity release arena start from 6.17%, fixed for life, so now may be the right time for customers to consider whether there may be a different way to manage mortgage debt in older age.
“Whether it be a lifetime mortgage or a retirement interest product, all choices come with risks as well as benefits.
“However, with modern equity release products now offering customers the ability to service some or all of the interest as well as having the embedded protections of a no-negative equity guarantee and surety of tenure, the combination of flexibility and safeguards can make this an option that can deliver good outcomes for a wide range of different customers.
“Speaking to a specialist financial adviser will help homeowners better understand all their options and make decisions that are appropriate for their individual circumstances.”
Jonathan Samuels, CEO of Octane Capital:
“The latest figures released this week suggest that inflation is now starting to ease.
“This is why the base rate has been left unchanged and will no doubt be heralded as proof of success by the Bank of England with respect to their approach to managing the economy.
“However, it’s fair to say that had they acted with greater speed and intent, the rate of inflation wouldn’t have maintained such a stubborn trajectory in the first place.
“Previous incremental increases to the base rate simply haven’t been effective enough and, as a result, the financial hardship felt by many households has been unnecessarily prolonged.”
Jason Ferrando, CEO of easyMoney:
“Yet another base rate increase may have been viewed as overkill due to the fact that inflation has started to ease in recent months, but it’s fair to say that the job is far from done and so many will argue that a freeze perhaps wasn’t the right path to take today.
“We’re yet to see prices actually fall and it’s simply the speed of increase that has reduced.
“So, it would be a shame for the Bank of England to fall asleep at the wheel now, just as they were starting to make some progress.”
Marc von Grundherr, director of Benham and Reeves:
“Today’s freeze will be a small victory for the nation’s homebuyers who have seen the financial goal posts move constantly in recent months.
“But despite rates remaining unchanged there will still be a real worry for those coming to the end of a fixed rate term, having previously locked in at a relatively affordable rate when they first purchased.
“When their mortgage term does expire, they are likely to find that the cost of their monthly repayments has risen considerably and this is really the last thing anyone wants to contend with, not only with the current cost of living, but with Christmas just around the corner.”
James Forrester, managing director of Barrows and Forrester:
“Good news for borrowers and today’s decision will bring about a notable boost to an otherwise uncertain housing market.
“We’ve already seen signs that mortgage rates are falling this week, driven by a reduction in swap rates and this could well be the peak, with rates set to reduce from here on out.”
Chris Hodgkinson, managing director of House Buyer Bureau:
“Despite today’s freeze many of those considering a property purchase are likely to remain sat on the fence while the cost of borrowing remains considerably higher than it has in recent times.
“For sellers, this means less interest from buyers, a prolonged transaction timeline and a greater chance that their sale could fall through due to heightened market uncertainty.
“The one positive to take is that house prices are yet to show any significant signs of instability and so those who can secure a buyer should still be able to sell for a good price, albeit it may take some time longer to do so in current market conditions.”
Adam Oldfield, chief revenue officer at Phoebus Software:
“You have to wonder whether we are sometimes playing a game of ‘follow the leader’, as the MPC’s decision to hold interest rates comes just a day after the Fed made the same decision.
“That said, it will be music to the ears of mortgage borrowers.
“There have been many calls in recent months for the Bank of England to take a breath and give the current measures time to take effect. Perhaps they are finally listening.
“No-one expects rates to come down, at least until inflation is closer to the Government’s target, but with over 500,000 fixed rate mortgages coming to an end in November, December and January (FCA), this is better news than expected.
“A period of calm, especially heading into the Christmas period, will be good for overall confidence.
“Add this to the Government’s U-turn on buy-to-let EPC upgrades and, all in all, it’s been a better week for the market. Let’s hope we see inflation continuing its downward trajectory next month.”
Ben Thompson, deputy CEO at Mortgage Advice Bureau:
“After 14 long months of hikes, today’s hold in the headline rate will offer much needed relief to homeowners.
“Whilst there isn’t obviously a reduction today, this announcement should offer a glimmer of hope that we’re nearing or have reached the peak, as well as providing a moment of respite for mortgage holders in the long-running interest rate cycle.
“Fixed rates however continue to fall, which is good news and the pause in rate increases will also be helpful for those on variable and tracker rates.
“Much will ride on the next set of inflation figures, and falling inflation will determine how long this pause holds before rates start to be reduced.
“As always, those struggling or concerned about their repayments should speak to a mortgage adviser for expert advice, and to secure a deal that would suit their financial circumstances.”
Gareth Lewis, managing director of property lender MT Finance:
“Some good news at last for the market, the beginning of the consistency and stability it needs.
“Too much uncertainty is not good for confidence but with inflation coming down further and the Bank of England choosing to keep rates where they are, in theory this should be the peak.
“The knock-on impact is that borrowers have a better idea as to where they stand and where mortgage pricing is going to be.
“Don’t get me wrong – plenty still needs to be figured out as affordability is still an issue, thanks to the many rate rises we have already seen.
“But this is something lenders can strategize around in terms of products and people will be more willing to take out a mortgage as they will have a better idea of where rates will be in six months’ time.
“This is a great opportunity for the back end of the year.”
Laura Rettie, editor in chief of Finance.co.uk:
“Despite the fact the Bank of England has spared those on variable rate mortgages more misery, the fact remains that millions of people with historically low fixed rate mortgage deals will soon be coming to the end of their term and moving onto products charging much higher rates of interest, leaving them with less disposable income.
“When people have less money to spend, businesses can suffer, and the Bank of England may respond by lowering interest rates.
“This, of course, was always the strategy to help lower inflation, but in reality, it’s hard to explain that all of this is designed to help the millions who will soon find themselves paying hundreds of pounds extra towards their mortgage each month.
“It’s challenging for borrowers to understand why hardworking homeowners have to bear the burden of getting inflation under control while the banks line their pockets.”
Nicholas Hyett, Investment Manager at Wealth Club:
“After fourteen rate rises on the bounce, and lower than expected inflation, the market had begun to think the run of rate hikes was all over – well it is now.
“The committee was split pretty much down the middle, with five in favour of a hold and four favouring a rise.
“The vote to trim QE by some 13% will tighten monetary policy a touch, and that may have given some swing voters the space to hold rather than hike.
“From here there’s a strong argument for the Bank taking a prolonged pause.
“Fixed rate mortgages and a higher proportion of mortgage free owner occupiers mean higher rates don’t feed through to the economy as quickly as they once did, and the full impact of past interest rate hikes hasn’t been felt yet.
“Expect the Bank to spend some time sitting back behind the ball and watching what unfolds.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“At last, lenders, borrowers, tenants and brokers can breathe a sigh of relief that base rate has been paused at 5.25% rather than yet another rise.
“It was a close call though as the MPC members voted five to four in favour, and the hawks are still vying for further rate rises to bring inflation down.
“It will be interesting to see how the money markets react as swap rates have been coming down a little lately, as have mortgage rates.
“Putting the brakes on base rate will be cautiously welcomed by borrowers on variable rates, those due to remortgage and people looking to buy new homes or move.
“But there is now a nervous wait until the next MPC meeting where the hawks may once again takeover.”
Gary Bush, financial adviser at MortgageShop.com:
“The Bank of England’s decision to hold the base rate steady will be music to the ears of UK mortgage holders.
“The country needs it and this will allow the lender fixed rate price war to continue. Excellent news. I bet Sunak and Hunt are furious at this decision.
“For once, the Monetary Policy Committee has listened to the UK public.”
Justin Moy, managing director at EHF Mortgages:
“It’s undoubtedly welcome news for mortgage borrowers, spurred on by unexpected improvements with inflation this week.
“It will help bring rates down in the short term, however we need to be mindful that this isn’t the end and that increases may still be needed in coming months.
“The close 5-4 split vote suggests there is caution still.”
Jamie Lennox, director at Dimora Mortgages:
“A huge sigh of relief will be felt by millions of homeowners around the country following this announcement and will only result in more mortgage lenders looking to reduce their pricing of fixed-rate mortgages in the weeks to come.
“Although the economy isn’t out of the woods just yet, it is a big milestone and hopefully we can say goodbye to any further increases in the months to come.”
Craig Fish, director at Lodestone Mortgages & Protection:
“This news is fantastic, and a sure sign that things are slowly starting to improve.
“We are seeing lenders reducing rates, and expect this to continue.
“That said, this was a close call of 5 vs 4 votes and is in no way an indication that there won’t be further increases at future meetings this year.
“But for today we celebrate that the MPC heart grew 3 sizes, as did that of all mortgage holders in the UK.”
Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial:
“Finally, some common sense by the Bank of England.
“Yesterday’s inflation print coming in lower than expected has forced Andrew Bailey’s hand and it will be welcome relief to households across the country who will be hoping this is the pivot point and rate cuts are on their way.
“There is lots to happen before that becomes reality, but this will be welcomed warmly across the country.”
Alastair Hoyne, chief executive officer, Finanze Group at Finanze:
“It’s somewhat a surprise move but perhaps reflects the sentiments of the wider public.
“This is good news for borrowers who have lived with the impact of numerous consecutive rate hikes and comes on the back of many lenders softening their rates and creating much-needed competition.
“We’re not out of the woods yet but it will be interesting where things go from here.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“A system of capitalism presumes sound money, not fiat money manipulated by a central bank.
“Bank of England do the right thing now and hold any further additional rises, until the lag of previous hikes has caught up, passed the baton back to you, and evidence a reduction in inflation figures even further.
“Don’t let Government Agenda dictate what actions you take to draw inflation down. Stand tall, hold your nerve now and represent the wider public.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“This is fantastic news for mortgage holders everywhere.
“With lenders and experts mostly predicting another increase, this hold decision will see even more fixed rate reductions from lenders over the coming days as their confidence that rates are near their peak grows on the back of the latest inflation data and the Bank of England giving their first pause in 14 months.
“The huge sigh of relief across the country was strong enough to set the off-shore wind farms spinning.”
Rhys Schofield, brand director at Peak Mortgages and Protection
“In a word, “phew.”
“With inflation falling faster than expected, pausing for breath was the right thing to do.
“Hopefully we now just get a bit of stability with mortgages.
“Early signs are that we’ve seen lenders reducing their new fixed rates in preparation for such a move and consumers can just get on with life without any more unexpected financial curveballs.”
Charles Breen, founder & director at Montgomery Financial:
“With all the economic data indicating that we have broken the back of inflation and the amount of damage rate rises are inflicting upon people and the economy, this was most definitely the right decision.
“Hopefully now this will give consumers some confidence and bring the mortgage and property market back to life again.”
Elliott Culley, director at Switch Mortgage Finance?
“All the talk in the lead-up to this decision today was about how the Bank of England will raise the interest rate to 5.5%.
“Inflation was expected to be higher than last month due to the rise in oil prices.
“So, it was a real surprise to see inflation had actually dropped. This immediately put doubt on whether a rate rise was necessary.
“The Bank of England has held the base rate which is brilliant news.
“I expect rates to tumble in the short term and this could be the start of mortgage revival.
“The market is still fragile and let’s all hope there is more positive news as we continue towards the end of 2023.”
Peter Stamford, director and lead adviser at Moor Mortgages?
“Well, the Bank of England finally woke up and smelled the coffee!
“Holding the base rate steadies the ship and could be just the jolt the property market needs.
“Here at Moor Mortgages we’re keeping our fingers crossed that this marks the beginning of a mortgage market comeback as we wrap up 2023.”
Amit Patel, adviser at Trinity Finance:
“’Hello, is it a base rate hold you’re looking for?’ Yes I certainly am, and so are millions of mortgage holders and small to medium-sized business owners.
“This is simply fantastic news on the back of yesterday’s inflation data. The MPC have for the first time in nearly 2 years taken the correct course of action.”
Scott West, director at Propertyze Consulting Limited:
“This was the right decision. whilst inflation rate is dropping consistently, it hasn’t returned to the desired levels yet.
“Maintaining the base rate will go a long way to ensuring that the current rate of change does not slow.
“Despite whether you believe that this was the best method to have curbed the inflation rate, it’s a vote of confidence from the MPC that the process is working, and stability is being restored.”
Luke Thompson, director at PAB Wealth Management:
“You do have to question the decision-makers at the Bank of England.
“They have gone very hard over the past 18 months to raise rates to try to get inflation down. At the first sign of even a small ray of light in this area, they have now stopped the rate rises.
“I’m not sure this sends the right signals and is this going to be another decision that backfires and means rates have to go higher moving forwards.
“The other side of this is that if inflation figures continue to be positive over the next few months it could mean that we have finally seen the end of the increases in interest rates which will be a relief to borrowers and businesses.
“We have seen rate deductions from lenders in recent weeks and I think this move will trigger a potential new round of rate cuts as lenders continue to jostle for market position.”
Richard Campo, founder at Rose Capital Partners:
“I’m very pleased to see the Bank of England pause its rate-rising cycle.
“I still find it surprising that in 2023 the best policy tool we can come up with for inflation is simply raising interest rates until the pain slows the economy and spending, causing a lot of unnecessary stress on already hard-pushed households at a time of a cost-of-living crisis.
“This is also great news for the mortgage and property industry.
“While internally we knew that we were nearing the peak of this current cycle as so many lenders have been cutting their fixed rate products, the seemingly endless rate rises from the Bank of England were causing borrowers to procrastinate on committing to their new remortgage deals and putting off some would-be homebuyers completely.
“This could even bolster house prices as we have seen huge pent-up demand in recent months from people holding buying off until mortgage costs stabilise.”
Gary Boakes, director at Verve Financial:
“We can finally breathe a sigh of relief after 14 straight base rate rises.
“This is truly fantastic news.
“The early thoughts were that inflation was going to stay stable and even rise this month so the unexpected core inflation drop yesterday means that we have time now to see if what they have been doing for the past 18 months is working.
“The close vote of 5-4 doesn’t mean we are out of the woods yet but with swap rates and mortgage rates dropping it feels like there is light at the end of the tunnel.”
Mike Staton, director at Staton Mortgages:
“After 14 increases to the base rate, the BoE has finally decided not to pile more misery on UK homeowners.
“There is now light at the end of a very long and dark tunnel giving UK homeowners the hope that further rate reductions are on the horizon.
“With 5-year swap rates finally below 5%, homeowners can start to breathe a sigh of relief that the worst is over, whilst many homeowners who took unadvised action and panicked into fixing long-term deals at 6% and over may start panicking now thinking they have made the wrong decision.
“For me, this was the intention of the lenders who hope to have a major payday when they see floods of extortionate early repayment charges coming into their coffers for people who want to reduce their outgoings.
“Hopefully, this is a life lesson for people to use advisors and realize a Google search engine or Martin Lewis commission-funded comparison sites just aren’t sufficient for today’s market.”
Rohit Kohli, operations director at The Mortgage Stop:
“The inflation figures yesterday were positive and it’s welcome news that the Bank of England has held rates.
“This should provide stability and confidence to the market.
“We’re not out of the woods yet, there could still be further rises later this year but if inflation can stay on track we may well avoid further pain to borrowers.
“We have already seen lenders reduce rates ahead of today’s announcement – we expect increased competition between lenders and hopefully, we see some increased activity in the property market as a result which will further instil confidence in the economy.”
Samuel Gee, director at Manning Gee Investments
“Today’s unchanged Base Rate from the Bank of England brings relief to mortgage holders, but it is undoubtedly a knife-edged decision, confirmed by the 5-4 majority vote within the Committee.
“While it eases immediate concerns for those with variable and tracker mortgages, the persistently high inflation, which still remains three times the Bank’s target, suggests that this respite may still be short-lived.”
Graham Cox, founder at Self Employed Mortgage Hub:
“The Bank of England has finally blinked and held the base rate.
“This is very welcome news indeed for borrowers, and with mortgage rates falling in recent weeks, we may even be past the peak.
“The only slight concern is sterling, which has fallen against the US dollar in recent days, and if it continues to do so, that could cause inflationary pressures as oil, gas and many other imports are priced in the greenback.”
Joe Garner, founder & managing director at Joe Garner Consulting:
“Holding interest rates steady during a period of high-interest rates can have both advantages and disadvantages.
“On the positive side, it can contribute to price stability by curbing inflation through reduced borrowing, spending, and investment.
“This approach also benefits savers, as higher interest rates provide them with more substantial returns on their savings and investments.
“Additionally, maintaining high rates can help deter excessive risk-taking and prevent asset bubbles, ultimately promoting financial stability.
“However, there are downsides to this strategy. High-interest rates have the potential to slow down economic activity by reducing borrowing, spending, and job creation, potentially leading to an economic slowdown.
“Borrowers, especially those with variable-rate loans, face increased costs, which can strain their financial situations.
“Furthermore, businesses may delay or even cancel projects due to the higher financing costs associated with high-interest rates.”
Samuel Bull, senior mortgage broker at JB Mortgages
“With the Bank of England voting to leave UK interest rates on hold at 5.25%, this brings to an end the longest successive period of rising rates in decades.
“Mortgage borrowers have been hammered in recent months, on top of the cost-of-living crisis, so now as we look to have passed the very top of the interest rate cycle, I am hopeful that we start seeing mortgage lenders competing for market share with rates starting with a four.”
Steven Hargreaves, mortgage and protection adviser at The Mortgage Co:
“Quite simply fantastic news, it is the first time since the end of 2021 that The Bank of England has voted not to increase rates.
“We have had 14 consecutive Bank rate increases – let us hope this is a sign of a recovery or at the very least much-needed stability.”
Aaron Strutt, product and communications director at Trinity Financial
“A break in the base rate hikes will hopefully give the market more confidence and lead to the continuing trend of fixed and tracker rate reductions.
“We are starting to see the lenders offering more sub-5% rates but they need to be cheaper.
“The purchase market is really slowing because of the high rates and homeowners are panicking as their repayments are so much higher.
“Many borrowers would be happier with fixed rates priced around four per cent, so we have some way to go.”
Marcus Wright, managing director at Bolton Business Finance:
“Finally, The Bank of England sees sense and holds off another rise, with great relief for homeowners and business owners!
“I am actually shocked that 4 out of 9 of the Monetary Policy Committee still voted to increase the base rate further.
“Inflation is down again, GDP is falling and unemployment is going up, if anything they should be considering rate cuts.
“No doubt they will wait until we are in a big recession until they start cutting rates again but this is a start.”
Jonathan Gordon, director of Wealth Management at IP Global:
“Mortgage borrowers should be prepared for the possibility of further interest rate increases in the coming months.
“However, the recent improvements in inflation are a positive sign, and they suggest that the central bank may be able to bring inflation under control without having to raise interest rates too much further.”
Ranald Mitchell, director at Charwin Private Clients:
“This is just the shot in the arm that consumer confidence, business and the property market needed, with the Bank of England clearly taking the view that everything is heading in the right direction.
“If things continue on a similar trajectory, rates could have peaked.”
Mark Tosetti, group partnerships director of ONP Group:
“In light of yesterday’s unexpected, yet welcome dip in inflation, the Monetary Policy Committee (MPC) likely had a more restful night.
“The markets had been optimistic that this news would grant the necessary breathing space to pause interest rates – and it has. The question is, have we now got two hands on the wheel?
“Today signifies a significant milestone in the MPC’s ongoing efforts to strike a delicate balance.
“While there had been discussion about the possibility of one final increase, the decision to align with the Federal Reserve’s recent pause is the right choice to make.
“If we are indeed witnessing effective measures to curb inflation and the pause becomes a drop, can we anticipate the welcome return of stability in borrowing costs?
“If so, this will surely pave the way for a greater availability of products tailored to consumers’ needs.”
Duncan Kreeger, CEO and founder of real estate finance and investment platform TAB:
“Today’s Bank of England decision is positive and indicates that interest rates will begin to stabilise over the coming months. It is time to adapt to the new normal and boost industry growth in changing market conditions.
“The rapid increase in interest rates from 0.1% in December 2021 has left little time to adjust to higher rates, however many were successful in managing rates above 5% when that was the norm before 2008.
“The new normal demands greater creativity from finance providers to keep projects going amidst labour shortages, evolving regulations, and rising costs.
“It’s our responsibility to make our loans and mortgages as economically viable as possible, ensuring the industry has the necessary funds to continue its growth.”
