The Bank of England’s Monetary Policy Committee (MPC) has once again voted to hold the base rate at 5.25%.
This move followed the central bank’s decision to hold rates in September, after 14 consecutive rises beginning in December 2021.
The most recent decision followed somewhat subdued figures released by the Office for National Statistics (ONS) last month, which saw inflation hold firm at 6.7%.
Many commentators said that the decision by the MPC may point towards a slow economic recovery on the horizon, following nearly a year of market chaos, which saw inflation peak at a 40-year high of 11.1% in October 2022.
Reaction:
Nicholas Mendes, mortgage technical manager at John Charcol:
“Todays ‘hold’ announcement has been widely anticipated by the markets and commentators, with any further rate hikes looking increasingly unlikely.
“UK economic activity is weakening, and inflation is on a downward trend. Now is the time to pause and monitor rather than adding further pressure onto borrowers and consumers.
“I am sure in the MPC minutes to follow there will still be signs that rates could rise if data indicates further action.
“But for now, let’s look towards the Autumn Statement to see what announcements the Chancellor has to make on the economy.”
Amanda Aumonier, head of mortgage operations at Better.co.uk:
“Keeping the base rate unchanged may leave homeowners with expiring fixed-rate deals somewhat disheartened.
“While controlling inflation is crucial, the burden of high-interest rates is a source of anxiety for families who could face an extra financial strain, potentially costing them hundreds of pounds each month for mortgage payments.
“First-time buyers may also find their dreams of homeownership seemingly out of reach due to the impact of elevated mortgage costs on their hard-earned savings for a deposit.
“The lasting influence of the pandemic on house prices adds to the challenges they face. Although house prices are declining, they are still hugely elevated compared to before Covid-19.
‘”For many homeowners, the looming question is whether to find a new fixed-rate mortgage or explore the potential benefits of a variable or tracker mortgage.
“Some are sensibly pondering the option to wait and see if rates will trend downwards before making a decision.
“The choice you make should align with your comfort level with financial risk and your current financial stability.
“If predictability and a tight budget are your priorities, retaining a fixed-rate mortgage is a sensible choice.
“However, if you are comfortable with some level of uncertainty and anticipate falling interest rates, a variable or tracker mortgage may lead to long-term savings.
“Keep in mind that seeking advice from a mortgage broker, even up to six months before your fixed-rate deal ends, can provide you with personalised guidance based on your unique financial situation.”
Steve Seal, CEO, Bluestone Mortgages:
“Today’s decision to hold interest rates is welcome news for borrowers across the country.
“Though rates have somewhat stalled, they are still at a historic high and it looks unlikely that there will be any cuts on the near horizon.
“Without a doubt, affordability will remain the key challenge for would-be and existing borrowers across the country.
“For those worried about how they can take their first or next steps onto or up the property ladder amid the current environment, rest assured that there is still help at hand.
“Mortgage brokers have a vital role to play in signposting customers to the best available options to suit their unique circumstances and help make their homeownership dreams a reality.”
Rob Clifford, chief executive of mortgage and protection network, Stonebridge:
“The mood music prior to this announcement appeared to point to the MPC holding Bank Base Rate due to a number of factors, not least a fall in UK food inflation announced earlier this week and, I suspect, a growing sentiment that businesses and consumers could not tolerate much more in terms of further rate hikes.
“So, it’s not surprising to see today’s decision, however we must be mindful that holding BBR does not mean a cut in bank base rate will follow anytime soon.
“A common view is that this could stay at today’s level until the early part of 2025, even if – as anticipated – inflation does fall further. We are all in a new higher rate environment that we need to get used to – particularly mortgage borrowers who are coming to the end of deals, as they will be facing a material shift in costs at a time when, for many, affordability is squeezed in general. Impartial advice about what to do, is even more critical.
“Mortgage product rates have continued to inch down in recent weeks, which is clearly good news, and this is a trend that could continue even without a fall in BBR.
“Lenders need to lend and hopefully a period of strong competition will show up in competitive mortgage pricing in the weeks and months ahead.”
Sarah Pennells, consumer finance specialist at Royal London:
“Today’s decision by the Bank of England to leave the base rate at 5.25% will be a welcome relief for consumers who have been concerned about the rising costs of their housing repayments through most of 2023.
“Our latest Cost of Living research shows that 80% of those who own their home with a mortgage are worried about affording their repayments, which is more than double the proportion of people that felt the same way last year.
“However, our research also shows that it’s those who are renting who are most concerned about affording their rental payments, with 82% worried about finding the funds to cover their rent each month, and almost a quarter of renters (24%) telling us they are extremely worried about affording their rental payments.
“When thinking about those who have been watching the savings market, 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 we’ve experienced. It’s vital that savers shop around to find the best account to help their money work harder for them.”
John Phillips, CEO of Spicerhaart and Just Mortgages:
“It is encouraging to see the Bank of England continue to hold interests rates, as the markets and the majority of economists expected.
“In reality, it feels like the only logical move as it’s still too soon for any reduction and an increase would just lump further misery and uncertainty on borrowers – especially as the Bank of England itself still doesn’t yet know the full extent or impact of its 14 previous rises.
“While inflation stagnated in September, the general consensus is it will continue its downward trend. In the mortgage market, today’s news will hopefully offer some stability and give lenders the confidence to take a further look at their books and continue to price more competitively.
“Even so, affordability remains a key blocker preventing many from pushing ahead with plans.
“With the expectation that rates will stay higher for longer, brokers must throw their arms around clients and educate them about the tools available to help make the numbers work and support borrowers of all backgrounds.
“With homeownership still a clear aspiration and a top priority for all the major political parties, it will be interesting to see what will be announced to encourage this important part of the economy as the election campaign gathers pace over the next 12 months.
“Increasing routes to homeownership, particularly for struggling first time buyers is absolutely critical in the current climate.”
Chris Flower, chartered financial planner at Quilter:
“For current and prospective homeowners, a further hold on interest rates will offer somewhat of a mixed bag.
“Those on variable rate mortgages will not see an immediate increase in their monthly payments, and the stability will provide further reprieve for borrowers – particularly those who may have been concerned about rising costs.
“Data from the Bank of England earlier this week showed that transaction levels are currently so low that mortgage repayments outweighed the value of new mortgage debt taken out.
“The housing market is currently in a deep freeze and while a hold in rates is certainly not bad news, it’s probably not going to thaw it out any time soon.
“However, if rate stability helps people begin to feel more financially secure, then house prices may drop less quickly than first feared, as more competition helps to prop up prices.
“For those looking to remortgage or take out a new mortgage, lenders appear to be remaining very strict with their criteria.
“Though fixed rates have lowered slightly, new borrowers or those looking to switch may not yet see significant reductions, but things are beginning to move in the right direction.
“After all, lenders are commercial entities which compete for custom, so we may see price wars which could help to push rates down further in the coming months.”
Tony Hall, head of business development at Saffron for Intermediaries:
“Today’s decision to maintain the base rate is another positive sign that the mortgage market is weathering the broader economic storm.
“This is especially poignant following the decision to stabilise rates in September, suggesting that we may enter the new year with a much more positive outlook than many expected at the beginning of 2023.
“Despite these signs of positivity, borrowers should still seek advice in order to navigate this complex market.
“Many customers will still be facing challenging financial situations, and the threat of payment shocks remain significant as they adapt to the new interest rate environment.
“Financial advisors can assist clients as they sail through these final choppy waters towards shore, helping customers find the best options available to them and ensuring they can fulfil their homeowning dreams.”
Tara Flynn, personal finance expert and founder of financial comparison site, Choosewisely.co.uk:
“The fact that interest rates remain so high is hitting families hard in today’s tough economic times. While the Bank of England argues that keeping the base rate high helps combat inflation, it’s a real struggle for many people who depend on borrowing to make ends meet.
“In the midst of a relentless cost-of-living crisis, households are stuck with costly credit cards and loans they’d rather not have. These are regular folks, forced into debt by the rising cost of living.
“Meanwhile, the banking sector is thriving, making huge profits because of high-interest rates. Lenders are charging more for borrowing, without giving much benefit to savers.
“It’s a classic case of one side winning while the other side loses, and it’s leaving a sour taste for borrowers and homeowners with fixed-rate mortgages about to renew.
“In many ways, keeping interest rates high is failing the very people the strategy is meant to protect.
“The time has come for a reevaluation and a heartfelt plea to the Bank of England to hit the brakes and rethink this approach because inflation hasn’t dropped at the speed you’d expected it to.
“If you keep doing the same thing, you’ll keep getting the same results. It’s time to rethink this outdated strategy in our modern, rapidly changing world.”
Tobias Gruber, savings expert and CEO of My Community Finance:
“The decision to hit the pause button on interest rate hikes means savers need to act fast to lock in those top rates for your savings – time is of the essence here.
“While the base rate stays put, it’s a golden opportunity for savers to boost their earnings, but you’ve got to make your move now.
“Traditional high street banks have lagged in transferring interest rate adjustments to savers this year, while they promptly increased borrowing costs.
“While the FCA’s efforts for fairness have led to some improvements, don’t remain idle, assuming your bank will boost your savings rate.
“Take control of your finances and seize the opportunity of these 15-year high savings rates.
“Compare your options among traditional banks, building societies, online banks, and credit unions. It’s just like searching for the best deal on car insurance – the same principle applies to your savings.
“Savings providers compete with each other, and when savers switch to get better rates, it spurs more competition and results in better rates for everyone.
“So, take control, ask more from your savings providers, and don’t miss out on this opportunity before the best deals vanish.”
Nick Leeming, chairman of Jackson-Stops:
“The market will take some clarity and comfort from the Bank of England’s decision to hold the base rate at 5.25% today.
“While international events have added to already challenging conditions and the curtain has firmly fallen on the era of cheap borrowing, monetary policy will not be determined in the long-term by short-term pressures, and quite rightly so.
“For the property market, holding rates steady provides certainty for buyers who remain committed to their property search.
“The reality is that, while some buyers who wanted to move but didn’t need to will take a step back, house-hunters who need to move are still showing a commitment to go ahead with planned purchases.
“Persistent demand is why we saw UK house prices rise in October, underpinned by a dearth of supply on the commuter belt and UK coastline.
“This is the final time the Monetary Policy Committee will meet before the Chancellor’s Autumn Statement, when we hope to hear more about the Government’s plans for the housing market including possible policy changes and tax cuts.”
Duncan Kreeger, CEO and founder of real estate finance and investment platform TAB:
“The Bank of England’s decision to maintain the basic rate of interest at 5.25% for a second time brings some much-needed stability to the market and will undoubtedly be a welcome boon for investors, developers, and lenders.
“We’ve seen a noticeable pickup in activity since the previous decision to hold rates, and we hope this positive momentum will continue over the coming months as we all adapt to the changed interest rate environment.
“With lenders taking steps to reduce rates, directly benefiting borrowers and increasing the viability of many projects and purchases, we anticipate this positive shift to ripple across the industry, providing the foundation for a positive Q4 and 2024.”
Mark Tosetti, partnerships director at Movera:
“As widely predicted the Monetary Policy Committee (MPC) have not rocked the boat and opted for a second successive pause.
“Perhaps the decision was not to take any chances, especially after the US Federal Reserve’s decision to keep rates unchanged yesterday, and the end of a year of rate hikes by the European Central Bank (ECB).
“The markets remain optimistic, buoyed by a recent drop in 2- and 5-year swap rates, but customer affordability needs to loosen in order to unlock greater product choice across the market.”
Andrew Gething, managing director of MorganAsh:
“After so many successive rises, news that the base rate will remain unchanged is certainly positive.
“This continuity will be most welcome among the proportion of borrowers who are on tracker or variable rate mortgages, providing some much needed certainty for what will be one of their largest monthly outgoings.
“While no increase is good news, the expectation is that rates will stay at an elevated level for much longer as sticky inflation remains a clear obstacle.
“Alongside challenges in the wider economy – particularly around wage growth – the Bank of England will also have one eye on a jump in mortgage arrears.
“Even with the consensus that inflation will continue to trend downwards, future rises are certainly not off the cards.
“With sustained pressure on household budgets, firms across financial services must stay close to clients to identify their potential stresses and vulnerabilities.
“This is of course a key pillar of Consumer Duty – and the clear requirement for all financial services firms to deliver good outcomes for clients.
“As the FCA highlighted recently, firms should not be treating the regulation as a ‘one and done’ box-ticking exercise.
“Instead, it should become a fundamental part of each business’s core operations, procedures and culture.
“In particular, monitoring outcomes for different groups (including the vulnerable) must remain a priority – an onerous task without the necessary technology to identify and monitor all clients.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“As expected, the Bank of England has made the wise and welcome move to hold base rate again at 5.25%.
“The run of 14 consecutive rate rises before September’s pause have been painful.
“Today’s decision will raise hopes that base rate has peaked, allowing the dust to settle rather than causing further anxiety and distress for borrowers.
“Borrowers will be wondering what happens next. Those hoping rates will move swiftly downwards could well be disappointed; we expect a period of around six months during which rates will plateau, followed by a gradual reduction in base rate to ‘normalised’ levels of around 3%.
“Many lenders have reduced their fixed rates in the past 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 continue to improve over coming weeks.
“Although we know a lot can change on the back of negative data, for now the outlook is much more promising than it was just a few months ago.
“However, there is no room for complacency as borrowers due to come off cheap fixes still face a payment shock.
“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.”
David Hollingworth, associate director at L&C Mortgages:
“With another hold decision borrowers will now be hopeful that they have seen the last of rising rates.
“Of course, we will need to avoid any more nasty surprises and see inflation continue to fall but the mortgage market has already shown much greater stability.
“Mortgage rates have been improving slowly but surely and today’s decision should only help to ensure that trend continues for now.
“Nonetheless borrowers approaching the end of their current deal should shop around to ensure they have a rate in place.
“They will be able to review if the market continues to improve but having a rate in place should help avoid an expensive period on a standard variable rate that can be well over 8 or even 9%.”
Paul Glynn, CEO of Air:
“After 14 consecutive increases in the base rate, last month’s decision was a strong indication that the market was finally settling into a steadier groove.
“The decision today continues the trend, confirming earlier predictions by economists that inflation would drop to a more manageable level before the end of 2023.
“It is still essential that aspiring first-time buyers and existing homeowners lean on professional advice during this challenging time.
“An adviser can draw upon years of experience to help customers secure a deal that is tailored to their circumstances.
“This is especially true for the over-55s, who may be feeling the impact of inflation as it erodes fixed incomes and pension pots.”
Paresh Raja, CEO of Market Financial Solutions:
“With the Bank of England holding the base rate and house prices growing unexpectedly yesterday, there’s room for positivity to return to the property and lending markets.
“Following a challenging 18 months, these reasons for optimism should translate into more favourable products and rates for property buyers in the coming weeks and months.
“Nevertheless, lenders cannot take their foot off the break when it comes to supporting brokers and borrowers who will still be feeling the harsh effects of the new higher rates environment.
“To help the market return to a more buoyant state, therefore, lenders must recommit to taking a proactive approach to lending – providing clarity and certainty to borrowers wherever possible, allowing them to enter the property market with confidence.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“The Monetary Policy Committee has made the decision expected by the market by keeping the base rate at 5.25%.
“It follows in the footsteps of the US Federal Reserve and the European Central Bank, which both kept rates on hold this month.
“All three of these institutions have expressed how unlikely it is that rates will fall in the coming months so the best we can hope for is no more rises in the foreseeable future.
“Further rate rises will challenge consumers and the economy as growth is very slow with the latest GDP figure at 0.2% and the threat of recession has not gone away.
“More rate rises may just tip us over the edge as borrowing costs continue to rise along with the high cost of living.
“The MPC members voting reflected this sentiment too with six members in favour of no rise and three voted for an increase.
“This is a divergence from the previous meeting, which was much closer at 5-4 opting to hold the rate.”
Dean Butler, managing director for Retail Direct at Standard Life, part of Phoenix Group:
“The Bank of England’s decision to hold the base rate again will come as welcome relief to people facing another difficult winter. Households approaching the end of a fixed mortgage term will be particularly glad of the respite.
“There’s also some good news for people in a position to save. It looks like rates might be peaking, however there’s no sign they’ll start to fall anytime soon and best buy fixed cash savings accounts are currently sitting between 5.5% and 6%.
“With inflation forecast to fall to around 5% by 2023, cash savings might start to outpace price rises for the first time in a long while.
“That being said, any gains are still small and it’s worth looking to an investment product like a stocks and shares ISA or, if you’re able to take a long-term approach, a pension for a chance to significantly beat inflation.
“Of course, we’re still a long way from the Bank of England’s inflation target of 2% and the sudden high interest environment has come as a shock to many. But there are some green shoots showing through.”
Thomas Jackson, managing director for Cooper Associates Mortgages:
“The property market is beginning to slow down which is likely to be attributed to a tightening of budgets as we head into the winter months.
“National mortgage data showed that September was one of the quietest months for mortgage searches.
“Unfortunately, national data is also showing house repossessions and debt arrears are increasing – another reason why the property market is stalling.
“The nation is really having to cut the cloth accordingly and prioritise necessary spend over luxury spend.
“A base rate hold is the best way forward. Another 0.25% increase will have undoubtedly caused many lenders to increase rates.
“They wouldn’t have all be prepared to have their margins squeezed, so they would have needed to pass the costs onto customers.
“As we head into colder months and the financial strain of Christmas, an increase would have been an unwelcome move for many homeowners on variable rate mortgages, those who are coming to the end of their term, and frustrated first-time buyers who have been waiting for so long to get their feet on the property ladder. For some, it may have meant unmanageable housing costs.
“It’s likely, after six weeks of stability in the market, the decision to hold at 5.25% will enable this trend to continue.
“Tighter household budgets in Q4 may mean that inflation falls without another base rate increase at all, but time will tell.”
Adam Oldfield, chief revenue officer at Phoebus Software:
“We may not have had the ubiquitous crystal ball to help us predict the MPC’s decision today, but it turns out we didn’t need one.
“Keeping the base rate steady for another month is the sensible thing to do.
“We’ve been calling for the committee to give all the increases this year time to take effect and, although we know there are other factors at play, the overall effect is some breathing space and hopefully a boost to confidence.
“Lenders have been reducing interest rates recently as two-year swap rates fall below 5%, so this hold from the Bank of England may well encourage more deals to come to market.
“The number of people coming off fixed rates is very high and many have been flipping onto SVRs, which is driving the cost of mortgage payments up past a point not experienced before.
“Arrears are increasing, which is almost inevitable, but perhaps those on higher rates may find better deals in the coming months?”
Ben Thompson, deputy CEO, Mortgage Advice Bureau:
“Today’s hold in interest rates is good news for those with mortgage deals expiring soon, and prospective buyers looking to get onto the property ladder.
“Another hold is likely a sign that the Bank of England has now concluded this cycle of interest rate hikes. But we mustn’t get complacent.
“This could very much change in the coming months based on how, and indeed if, inflation continues to fall.
“The mortgage market has already seen drops in the swap rates used to calculate mortgage prices, and there is hope that a second consecutive pause might mean more reductions ahead for homeowners.
“Prospective buyers and mortgage customers will be relieved by the prospect of a steady rate, and hopefully not too distant reductions in the base rate.
“While there is hope that rates won’t rise again, there is a small chance they will, and action now could be more beneficial in the long run.
“This could be the sign for many homebuyers to take advantage of stable rates before there are further rises.”
Chris Hodgkinson, managing director of House Buyer Bureau:
“We’re seeing clear signs that the property market is now starting to stabilise, although transaction levels and sold prices remain down on the historic highs seen in recent years, as the higher cost of borrowing and wider cost of living continue to restrict home buyers.
“So today’s decision to hold interest rates should be viewed as a welcome positive for the property market and should allow buyers and sellers alike to act with a greater degree of confidence going into 2024.”
Jonathan Samuels, CEO of Octane Capital:
“The Bank of England seems to have tamed inflation to a degree, albeit it’s taken considerably longer than it should and remains some way off the two percent target.
“Given that there’s still a good bit of work to be done, today’s decision to hold interest rates won’t come as a surprise and we can expect the base rate to remain around 5% for some time yet.
“Of course, this ‘new normal’ has historically been the norm anyway and, as home buyers and owners adjust to this latest benchmark of borrowing affordability, we should see the property market stabilise and return to business as usual come 2024.”
Bradley Post, CEO of RIFT:
“Households across the nation will be breathing a sign of relief with interest rates remaining static in the run up to Christmas.
“This will, at least, provide some stability with respect to the cost of borrowing, particularly during a period where our household spend is far higher than usual.
“Of course, while positive, this still doesn’t detract from the fact that the cost of living remains substantially high and, as a result, a great deal of people will be facing another Christmas of cutbacks in order to make ends meet.”
Jason Ferrando, CEO of easyMoney:
“It would appear that the Bank of England is starting to get a handle on inflation but a freeze on rates was to be expected given that we’re not yet out of the woods.
“For the nation’s borrowers, this will do little to ease the financial pressure they are facing with the base rate remaining at its highest in over 15 years.
“The silver lining is that for those looking to accumulate a savings pot for future endeavours, returns are favourable, although how favourable depends on where and how you choose to invest your money.”
Tomer Aboody, director of property lender MT Finance:
“The Bank of England has wisely held rates on the back of dipping inflation.
“This should give consumers confidence that inflation is on track to be halved next year, but more importantly it will keep more money in people’s back pockets as they continue to struggle with the high cost of living.
“Uncertainty around interest rates, which are also much higher compared with recent years, does nothing for confidence and is feeding through to lower level of mortgage approvals for both transactions and remortgaging.
“The market is waiting to see if rates can finally stabilise or potentially fall in the near future, which will improve the ability to finance.
“With base rate appearing to have peaked, the next step is some form of government assistance on stamp duty to incentivise buyers and get the housing market moving.”
Andrew Gall, head of savings and economics at the BSA:
“Today’s decision to keep the Bank Rate at 5.25% will be welcome news for many.
“Whilst we can’t yet be confident that mortgage rates have reached their peak, we have started to see them nudge down a little and today’s news is unlikely to reverse that.
“However, while inflation remains persistently high, overall rates will stay higher for longer than we thought earlier in the year.
“The number of borrowers struggling to maintain their mortgage payments has started to increase.
“Whilst building societies’ lower risk approach to lending decisions means they have proportionately fewer loans in arrears compared to banks, there is no room for complacency.
“Societies are conscious that it is a real worry for families and individuals who are having difficulty meeting their mortgage payments.
“They are ready and well equipped to offer practical, tailored support to anyone who may be struggling and I would encourage anyone with concerns to contact them as soon as possible, preferably before they miss any payments.
“For savers, there remains a wide choice of accounts with attractive rates available for all levels of deposit.
“Shopping around can now make a sizeable, financial difference, particularly for those who hold most of their savings in their current account.
“There is currently £260bn of savings in accounts not earning any interest, meaning an average saver could be missing out on over £1,0001 extra income a year.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“The huge relief of this much-needed hold decision will be the early Christmas present everyone wanted in their stocking.
“It will help safeguard many businesses and families and give more confidence in the property market and with lenders on their product pricing.
“This could be the shot of adrenaline that the property market needed.”
Graham Wells, founder and financial coach at GroWiser Financial Coaching:
“Today’s decision to keep interest rates on hold will be broadly welcomed, especially by those with variable-rate mortgages and other debts.
“Mind you, the Monetary Policy Committee decision was not unanimous, with three of the nine members voting for an increase.
“We can’t assume that interest rates have peaked just yet.
“Interestingly, the forecast for economic growth has been downgraded, with expectations of a static economy until after the next General Election.
“As always, there’s little to be gained from speculation, so best to plan your own personal finances with a degree of caution and be prepared for multiple scenarios.”
Rohit Kohli, operations director at The Mortgage Stop:
“This was probably the safest bet you could make this week and is the right call given the direction of all the economic indicators pointing to an increasing likelihood of a recession.
“More than anything the housing market needs stability to allow confidence to return and this hold decision goes a long way to providing this.
“Hopefully, external factors don’t stop inflation from reducing, and if the Bank of England’s estimates are correct and we see a sharp drop in inflation then I think we’ll see rates hold at these levels for a long period.
“Now over to the Chancellor to see what kind of shot in the arm he can give the economy and the housing market in his Autumn Statement.”
Elliott Culley, director at Switch Mortgage Finance:
“Two pauses in a row is great news and, hopefully, this means the peak has now been hit.
“The expectation would be for mortgage rates to continue reducing as a result of this decision.
“Six members voted to stay with three wanting a rise. I would expect the base rate to stay higher for longer, but with the growth figures being cut for next year and the year after, we may see base rate reductions in 2024, which could be earlier than currently forecast.”
Graham Cox, founder at Self-Employed Mortgage Broker SEMH:
“No surprise the Bank of England held the base rate at 5.25%, and this time the vote was less close, six to three in favour.
“The bad news is the Bank is predicting weaker GDP growth than expected of just 0.1% in Q4.
“Nevertheless, it feels like interest and mortgage rates may have peaked, and I suspect they’ll now fall quicker than many are predicting, though the days of ultra-low mortgage deals are long gone.”
John Lamerton, small business author at Big Ideas… for Small Businesses:
“Rates may have been left on hold but higher for longer is killing small businesses.
“Homeowners only feel the pain when their fixed-rate deals end. Small business owners have been hurting for years now, dealing with enforced lockdowns, supply-chain issues, a lack of skilled workers, a gloomy economic outlook and sky-high inflation and interest rates.
“Interest rates being left unchanged is welcome but for many it will be too little, too late.”
Alastair Hoyne, chief executive officer at Finanze:
“This is a welcome result. While inflation remains static, a bedding-in period is to be expected with any new monetary policies.
“We’ve already faced tumultuous times within the lending market, with rates all over the place.
“Today’s decision will keep the peace and provide stability. As we head towards the end of 2023, I’m sure many will be relieved to hear today’s news.”
Gary Bush, financial adviser at MortgageShop.com:
“The Monetary Policy Committee’s decision to hold the base rate at 5.25% will be music to the ears of UK mortgage holders.
“This will inject positivity and calm into the general public and should allow 2023 to end on a high, something we definitely need after a turbulent year.”
Justin Moy, managing director at EHF Mortgages:
“The smart money was definitely on the base rate being maintained at 5.25%. Lenders have been pricing for this very outcome over the past few weeks, too.
“We have plenty of ground to make up on inflation in particular, and with the Prime Minister’s pledge of 5% inflation by the end of the year, any base rate cuts would be off the agenda until 2024.
“But we can see there is an improvement in the economy, this may accelerate throughout the next 12 months, and the base rate may have just found its peak.”
Craig Fish, director at Lodestone Mortgages & Protection:
“This was the right decision by the MPC. I suspect this is where we will be at the year’s end, and expect markets and lenders to react positively.
“Expect some more rate reductions in the coming days and weeks from lenders as they fight to regain lost ground.”
Riz Malik, founder & director at R3 Mortgages:
“The mortgage markets will react positively and I think we should still see rates falling over the next week.
“If the Autumn Statement has an early Christmas present for the property market, we may, just may, finish this disastrous year on a high.”
Ranald Mitchell, director at Charwin Private Clients:
“A sensible move by the Bank of England, holding their nerve and keeping the base rate steady.
“Seems like everything is slowly moving in the right direction and I would be surprised to see any movement until 2024.
“Good news for everyone fearing the worst and this will hopefully help spur confidence in the property market.”
Andrew Montlake, managing director at Coreco:
“You can almost hear the collective sigh of relief from mortgage borrowers across the country as the Bank of England sensibly decided to keep interest rates on hold once more.
“They do now seem to be heeding the warnings from some quarters that going too far with rate rises could cause significant problems for the economy as a whole.
“There is some evidence now that inflation is naturally waning, and we could see the pace pick up over the coming months.
“In fact, there is some debate now as to whether the Bank should start to cut rates in the near future.
“Whilst many expect interest rates to stay higher for longer, as thousands more borrowers come off low fixed rates into the current environment, this could have a profound effect.
“The Bank is walking a narrow tightrope now, and its next decisions will prove crucial not just for borrowers and the economy at large, but also weigh in on the upcoming General Election next year.”
Rob Gill, managing director at Altura Mortgage Finance:
“With the housing market and wider economy showing increasing signs that the medicine of higher interest rates is working, a pause by the Bank of England is sensible.
“The aim is to cure the economy of the scourge of inflation, not mortally wound it by choking off growth unnecessarily.”
Peter Stamford, director and mortgage expert at Moor Mortgages:
“Hot on the heels of this week’s better-than-expected house value figures, the Bank of England has chosen to leave the base rate as it is.
“This decision reflects a cautious approach, balancing the challenges of inflation with the potential risks of recession.
“For homeowners, those on variable rate mortgages and the bravest mortgage lenders who have been reducing rates ahead of this decision, it’s a huge sigh of relief.”
Jack Tutton, director at SJ Mortgages:
“The Bank of England has prevented another storm today by holding the base rate at 5.25%, the second time in a row that they have held it at this level.
“Whilst the rate is still at a 15-year high, this will be welcome news to mortgage holders as this should breed further confidence in the financial markets.
“This will hopefully lead to more lenders reducing the cost of mortgage products in the coming weeks.”
John Choong, senior equity research analyst at Investing Reviews:
“Although CPI remained stagnant in September, the MPC has made better judgement in acknowledging that inflation will continue to fall in the months to come and have opted for another pause today.
“With rate cuts expected as soon as Q3 2024 and an increasing number of cuts through to 2026, it seems like the rate-hiking cycle has officially come to an end.
“Wage growth is tapering off and the services PMI figures have been in contraction, while the BRC’s latest shop price inflation also saw disinflation.
“Swap rates are also falling, which will lead to more mortgage rate cuts, hence why housebuilders and banks are rallying today.
“That said, markets shouldn’t get complacent. While inflation is expected to continue falling, sticky services inflation may continue to present a problem in getting CPI back down to the Bank of England’s target of 2%.
“This could lead to unpleasant surprises as Andrew Bailey and his cohort may opt to leave rates higher for longer.”
Amit Patel, adviser at Trinity Finance commented:
“Millions of households and businesses will breathe a huge sigh of relief on the back of today’s announcement by the Bank of England to keep the base rate on hold.
“This is the correct decision and those members that voted to keep the rates on hold should be applauded.
“This is the second meeting in a row that rates have been kept on hold and it will be interesting to see what happens at the next meeting.”
Kundan Bhaduri, property developer and portfolio landlord at The Kushman Group:
“The Bank of England has sadly decided to go along predictable lines and hold the rate at 5.25%.
“In the face of zero growth that the Bank is projecting for 2024, this is perhaps the wrong decision at this time.
“I would have expected the Bank to be more radical and give consumers and businesses more confidence and an incentive to spend their money, which would ultimately boost economic growth.
“A six to three decision in favour of holding the rates is actually closer than you would like to think.
“CPI inflation is expected to fall in the near term, reflecting lower annual energy inflation that we have seen over the last quarter.
“All it takes is two MPC members to change their minds, and hopefully, we will see the first interest rate drop in the last MPC meeting scheduled for December 2023.”
Gary Boakes, director at Verve Financial:
“With a flurry of rate reductions from lenders this week, it certainly felt that there would be positive news from the MPC meeting today.
“With the base rate holding now for the second consecutive meeting with a more positive vote than previously now starts the long slow process of recovery with interest rates set to continue to reduce but at a very slow rate.
“We are now at the top of table mountain, and are just waiting until inflation is at a level where the base rate can start to be cut.”
Simon Bridgland, broker and director at Release Freedom:
“Good to see common sense prevail. Consumers and businesses couldn’t hack another rise.
“Hopefully, things have hit the threshold of how bad it will get, coupled with the fairly positive news from Nationwide’s house price index yesterday should make for good sentiment with consumers. Great to have good news for a change. Markets will like this.”
Claire Flynn, mortgages expert at Confused.com:
“The base rate remains at 5.25% following a meeting of the Bank of England’s Monetary Policy Committee today.
“This is the second time in a row that the rate has stayed the same, following several increases to reduce high inflation levels.
“So what does this actually mean for mortgage borrowers? Well, no matter what happens to the base rate, those currently on a fixed-rate mortgage won’t see any change to their rate or repayments.
“But those on variable rate mortgages, particularly tracker deals, are likely to be more relieved that the base rate hasn’t increased.
“Tracker mortgage rates are set at a fixed amount above the base rate and change alongside it. As the base rate hasn’t changed, those on tracker deals won’t face an increase in repayments.
“Discount mortgage and standard variable rates aren’t directly linked to the base rate but are influenced by it.
“So, the fact it hasn’t increased is likely to be good news to those with these mortgages as well.
“If you’re due to remortgage soon, the base rate remaining the same may also be a welcome announcement.
“But rates remain much higher than a few years ago so it’s still worth looking across the market to find the best deal for you. An independent mortgage broker can find and recommend deals suited to you.
“And remember that if you’re struggling with higher repayments, speak to your current mortgage lender. They may be able to provide some options to help you manage this.”
Matt Surridge, sales director at MPowered Mortgages:
“Today’s decision by the Bank of England to keep interest rates at the same level for the second consecutive meeting will be a welcome decision to those who are already struggling with the rising cost of borrowing.
“With the economic landscape looking more stable, swap rates have remained consistent and for first-time buyers, or homeowners renewing their mortgage, rates have continued to trend in a more stable direction.
“The cost-of-living is likely to remain high for the foreseeable future and lenders and brokers need to work together to support consumers.
“Product innovation remains integral in a continued period of uncertainty for buyers and remortgagers, and at MPowered, we are committed to creating solutions that can rapidly process complex applications, allowing brokers to get decisions for their customers as quickly as possible.”
Julian Jessop, economics fellow at the Institute of Economic Affairs:
“Bank of England Governor Andrew Bailey is wrong to say that it is ‘much too early to be thinking about rate cuts’.
“Economic activity and inflation have both been weaker than the Bank had expected, money and credit growth have collapsed, and business surveys are already signalling recession.
“Despite this, the Monetary Policy Committee has kept its bias toward raising rates further, based on its judgement that the risks to inflation are skewed to the upside.
“Indeed, the Bank is still tightening monetary policy by selling back the UK government bonds it bought under ‘quantitative easing’ – and at a faster rate than before.
“If these upside risks fail to materialise, it won’t be too long before rate cuts are back on the agenda. But in the meantime, the Bank would do better to keep all its options open.”
Nicholas Hyett, investment manager at Wealth Club:
“The market had expected the Bank of England to hold rates steady this time round, so there’s no headline surprise from the Monetary Policy Committee. But the devil is in the detail.
“The Bank seems to disagree with the widely held view that the UK economy is creaking badly.
“While it notes some gloomy data from the most recent PMIs and evidence that labour markets are softening, it does not think the UK is on the edge of a dangerous economic reverse.
“In fact, three members of the committee voted to raise rates further – clearly suggesting the Bank sees more risk in inflation than in recession.
“Having said that there is some good news where inflation is concerned. Inflation is expected to be under 5% in the final quarter of the year.
“A substantial fall from the most recently reported number and welcome news for a government that made cutting inflation a key policy pledge.
“Overall, it’s a surprisingly positive set of minutes from the Bank, and certainly doesn’t reflect the gloom you might feel on the streets.
“The result is a pause in rate hikes, but the commentary doesn’t suggest interest rates will fall quickly from here.”
