The Bank of England’s Monetary Policy Committee (MPC) has voted to hold the base rate at 5.25%, for a fourth consecutive time.
This followed the central bank’s original decision to pause rate hikes in September 2023, after 14 consecutive rises that began in December 2021.
Explaining this decision, the Bank reaffirmed its commitment to reducing inflation, stating that its decision to raise rates over the past few years has been successful.
However, with inflation still well above the proposed target of 2%, the Bank said that it aims to “make sure it comes down further.”
Many commentators have predicted a number of interest rate cuts from the central bank later in 2024, amid growing recession concerns and the ongoing ‘rate war’ between mortgage lenders.
The most recent decision followed subdued inflation figures released by the Office for National Statistics (ONS), which saw the Consumer Price Index (CPI) rise to 4.0% in December from 3.9% in November.
Reaction:
Nicholas Mendes, head of marketing at John Charcol:
“Today’s MPC hold announcement was almost a foregone conclusion subject to the usual 12pm suspense.
“Following a similar decision by the Federal Reserve to leave interest rates at a 12 year high yesterday, it wasn’t the announcement but the commentary from the Fed that cuts are coming, but not just yet which set a similar precedent in the run up to today’s meeting.
“Following today’s decision, markets will be eagerly anticipating the notes from the governor to get any indication on future bank rate movement sentiment.
“Traders will also be assessing the breakdown of votes to see if there are any other signals which could indicate when we can expect the first bank rate cut.
“Despite UK shop price inflation easing in January to its lowest rate in almost two years as retailers heavily discounted goods during a weak sales period, core inflation remained at 5.1% in the year to December, higher than the MPC desired benchmark.
“Markets had subsequently been pricing in that the Bank of England will hold the bank rate at 5.25%, with any rate cuts to start in June as inflation is expected to slow towards the central bank’s 2% target.
“Despite today’s announcement, mortgage rates are expected to continue steadily reduce over 2024.”
Paresh Raja, CEO of Market Financial Solutions
“The Bank of England continues to walk a tightrope.
“Sticky inflation is making them hesitant to cut rates, but a rise in company insolvencies and the general impact of a higher cost of borrowing on the UK economy is piling on pressure to drop the base rate.
“Either way, we now know the base rate has almost certainly peaked, and it is just a matter of time before it comes back down.
“This shift has already started to have an impact on lenders and the property market in recent months.
“Mortgage, bridging and buy-to-let rates all have started to fall, and there are the green shoots of recovery emerging after two challenging years, with early signs suggesting buyer demand and house prices are picking up.
“The bank might hold again – perhaps multiple times – before the cuts come, but the market is benefitting as that seemingly inevitable decision draws closer.”
Jason Ferrando, CEO of easyMoney:
“The Bank of England has been careful not to run before it can walk where our current economic recovery is concerned, and so today’s decision was largely expected despite a sharp fall in inflation this week.
“This is probably the correct decision and while it won’t immediately ease the burden of the nation’s borrowers, it should help boost sentiment based on the expectation that we could now see a reduction in interest rates on the horizon.”
Jonathan Samuels, CEO of Octane Capital:
“It appears that the Bank of England’s slow but steady approach to managing the economy has finally started to pay off, with inflation falling sharply this week.
“Generally speaking, today’s decision to keep the base rate held should bring further positivity for the economy and the property market, in particular.
“But while it’s likely to stoke the fires with respect to the increasing number of buyers returning to the market in recent weeks, they are best advised to proceed with caution.
“Swap rates have been gradually climbing so far this year in anticipation of today’s decision and so an ongoing degree of certainty where the base rate is concerned doesn’t necessarily mean lower mortgage rates are guaranteed.”
Guy Gittins, Foxtons CEO:
“A freeze on interest rates since September of last year resulted in 2023 finishing with a far higher degree of mortgage market positivity than many had forecast and it’s now clear that this positivity has carried over into 2024.
“We’ve already seen a promising start to the year compared to January last year, as buyers have returned to the market.
“However, the potential now is that mortgage rates could start to climb following a fourth consecutive decision to keep the base rate frozen at 5.25% and we’ve already seen evidence of lenders increasing swap rates in recent weeks in anticipation of today’s news.
“This will further add to the air of urgency shown by buyers of late, who have been encouraged by sub 4% mortgage opportunities and have been keen to secure them while they are available.”
Verona Frankish, CEO of Yopa:
“Today’s decision won’t necessarily add to the property market positivity seen so far this year, but it certainly won’t diminish it either.
“Whilst the cost of borrowing remains higher than the nation’s borrowers have become used to, they should be reassured that we’ve likely seen the peak where interest rates are concerned, and that any future movement will be downwards.
“This should help draw more buyers back to the market and we anticipate that the uplift in market activity seen during the closing stages of last year will continue to build throughout the year ahead.”
Jason Harris-Cohen, CEO of Open Property Group:
“Any amendment to the base rate takes time to filter through to the markets and longer still before we see it impact consumer confidence.
“We’re only now seeing the benefit that has come from the previous freeze on interest rates and so to have lowered them today would have been somewhat premature.
“However, given this week’s reading on inflation, we hope that the next decision will be a cut.
“Failing to do so could plunge the economy into a period of negligible growth for the foreseeable future and it’s about time we started to stimulate a recovery.
“We’ve already seen signs that the property market is heading in the right direction following the first decision to freeze rates at 5.25%, with mortgage approvals starting to climb consistently.
“But it’s about time we throw the nation’s homebuyers a bone to help kick start the market and reverse the downward house price trends of recent months.”
Marc von Grundherr, director of Benham and Reeves:
“The property market has made considerable strides forward since the Bank of England first held the base rate at 5.25% and so today’s decision will only bring more certainty to buyers, helping to further cultivate the positive market landscape that has been developing.
“Yes, interest rates remain at their highest in over 15 years, however, this isn’t the cause of a diminished appetite for homeownership.
“Increasing rates, market uncertainty and ever-changing mortgage offers are the key deterrent and buyers can now rest assured that the only way is down with regard to interest rates over the coming year.”
Ruth Beeton, co-founder of Home Sale Pack:
“While it’s reassuring to see continued certainty in the form of a freeze on interest rates, it will do little to boost an otherwise sluggish property market which is in desperate need of stimulation.
“Yes, we’ve seen a marginal uptick in mortgage market activity in recent months, however, it remains a challenging environment for buyers and this leading to far longer transaction times, not to mention an increase in the number of sales falling through.
“Hopes of a rate cut later in the year should help, but until they do materialise, the property market is likely to plod along in the state of limbo seen for much of the last 12 months.”
Colby Short, co-founder and CEO of GetAgent.co.uk:
“Today’s decision to hold the base rate at 5.25% marks six months since the last interest rate hike and the overarching opinion is that we’ve now seen the peak in this respect.
“This has helped to stabilise the market and we’ve seen mortgage rates start to reduce, tempting buyers back the fold and increasing mortgage approval numbers in the process.
“This has delivered a much needed shot in the arm to the UK property market and it’s now a far more attractive place to be for the nation’s sellers who have been desperately waiting to make their move.”
Steve Seal, CEO, Bluestone Mortgages:
“The Bank of England’s decision to continue to hold rates at 5.25% for the fourth consecutive month will be welcoming news to existing and prospective homeowners.
“While it’s unlikely that the first rate cut is anytime soon, there feels to be a growing sense of confidence within the mortgage market, supported by a dose of healthy competition between lenders reducing their rates.
“However, for those who are still worried about how they can climb onto or up the property ladder, rest assured that there is always help at hand.
“It is the duty of this industry to signpost customers to the best available solutions catered to their unique circumstances so that they can make their homeownership dream come true.”
Jonathan Bone, mortgage lead at Better.co.uk:
“Despite the unexpected increase in inflation towards the end of last year, the Bank of England decision-makers have held their nerve and maintained the base rate. This provides a modest silver lining for homeowners, as it encourages lenders to keep their rates stable.
“Forecasts from experts suggest a potential decline in the base rate by July and even more so by the end of 2025 – positive news for those aspiring to step onto the property ladder.
“Nevertheless, the reality stands that homeowners reaching the end of their fixed deals will need to allocate more funds to cover the higher cost of their mortgage repayments.
“The average two-year fixed rate has doubled compared to two years ago and experts anticipate that rates may not dip below 3.5% for several years.
“I strongly recommend speaking to a mortgage broker as soon as possible so they can look at your options, including variable rate and tracker mortgages.
“A broker will help you secure the right deal for you, even if mortgage rates fall during your application.”
Michael Foote, CEO of Quotegoat.com:
“The Bank of England has maintained the UK’s base rate at a 15-year high since August, citing it as a crucial measure to combat stubborn inflation.
“However, the strategy to curb spending seems ineffective, with inflation persisting and imposing an unwarranted burden on homeowners.
“Today’s announcement dashes any hopes of relief for those approaching the end of their fixed-rate mortgage deals.
“In a landscape of soaring bank profits, homeowners find themselves bearing the financial brunt of the Bank of England’s approach.
“This predicament underscores the intricate challenge of striking a balance between economic stability and the welfare of individual borrowers.”
Edward Newman, CEO of financial comparison site, Finance.co.uk:
“Today’s announcement will hit like a wave of frustration, particularly for the millions with fixed-rate mortgage deals ending this year, businesses and borrowers.
“The Bank of England’s plans to keep interest rates high as a means to control spending seem to be floored as the brunt of this strategy falls on hardworking Brits. Any hopes for a rate cut, which were whispered about at the end of last year, appear to be dwindling.
“This uphill battle is shared by millions nationwide, prompting a pressing question: is keeping interest rates high truly the promised silver bullet?
“While banks are raking in record profits estimated to be nearly £1,000 for every person in the UK last year, hardworking homeowners seem to be shouldering the financial burden.
“It’s time for us to be demanding answers — is there not a more effective approach?”
David Beard, founder and CEO of financial comparison site Lendingexpert.co.uk:
“The uptick in inflation towards the close of last year has posed a challenge for the Bank of England in its continuous efforts to combat rising inflation. Andrew Bailey is likely to have reconsidered any initial plans for interest rate cuts in the first half of this year, given the latest inflation data released last month.
“The escalating overhead costs that businesses currently face have become a catalyst for a troubling cycle.
“The consistently elevated interest rates upheld by the Bank of England exert additional pressure on businesses, particularly those reliant on loans, forcing them to raise their prices.
“This, in turn, contributes to the persistence of high inflation, creating a complex and challenging scenario for the overall economy.”
Rob Clifford, chief executive of mortgage and protection network, Stonebridge:
“Few will be surprised by the Bank’s decision to keep BBR on hold this month.
“With last month’s slight rise in inflation, the Bank has likely opted to keep a watchful eye on the next set of figures rather than move too soon.
“While swaps have moved back up in the last week or so, the money markets still anticipate the Bank reducing rates throughout the year, with many economists forecasting at least two quarter-point cuts at some point.
“As the year progresses – and specifically if inflation falls further – there will be growing pressure to bring down rates, especially the closer it gets to its 2% target.
“Mortgage lenders spent the first half of January following each other in repeatedly cutting rates; however, this has slowed recently, and today’s BBR decision – and the rise with swaps – will mean we see a more consistent and static mortgage rate environment in the weeks ahead.
“There are many competitive rates available though and this current plethora of product choice, coupled with increasing consumer confidence, presents an optimistic outlook for mortgage brokers.
“It’s a far better rate environment than the one we were all wading through this time last year, hopefully providing both existing and would-be homeowners with cheaper mortgages than those we’ve seen available in the previous 12 months.”
John Phillips, CEO of Spicerhaart and Just Mortgages:
“Even before the recent surprise news on inflation, my expectation was the Bank of England would sit on the base rate once again – even though it should cut.
“While there’s no doubt the bank has much to consider, the danger is it takes too long to make a decision and it eventually comes too late.
“Nevertheless, continuity and stability is a positive, especially for those not on a fixed rate deal.
“While it’s not here yet, a potential cut to base rate on the horizon is certainly helping bring some confidence back to the market, along with continued competition among lenders with rates coming down.
“We’ve seen this first hand in both our new buyer registrations and in requests for valuations, which are both at their highest point for a number of months.
“With affordability remaining a real stumbling block for many borrowers, it would be fantastic to get to a position where the base rate is improving, lenders are continuing to innovate, and the government is bringing some much-needed support to the housing market.
“Given recent news and speculation, this may become a reality in the not-too-distant future.
“Meanwhile, our message to our brokers is to keep supporting clients, stay visible and proactive, and keep highlighting the value of advice – especially as borrowers try to navigate the market.”
Nathan Emerson, Propertymark CEO:
“It is positive to see that many people intending to buy their first home or sell their current one won’t be hindered by an increase in interest rates.
“However, it is now time for the UK Government to continue to curb inflation so that interest rates can fall further to help ease the backlash this has had on people’s affordability.
“They should make 2024 the year consumers start to enjoy some confidence again following three years of disruption to the economy.”
Daniel Austin, CEO and co-founder at ASK Partners:
“A hold on interest rate rises was expected now that inflation has started to fall.
“Although there was an effect on the affordability of debt, yesterday’s slight uptick in house prices is a positive indication that prices may have reached their lowest point.
“This will bring investment capital back into the real estate market from buyers who have been waiting to make opportunistic, distressed purchases.
“Those with finance in place are well poised to capitalise on the situation but the market in general will benefit from increased activity bringing back buyer confidence.
“As a lender to property developers and investors, we have seen first hand the impact that rate hikes have had on borrowers and the market; stabilisation will be welcome news.”
Karen Noye, mortgage expert at Quilter:
“In light of the Monetary Policy Committee’s decision to maintain interest rates at their current rate, the recent moves by lenders to trim mortgage rates take on a particularly significant role in the current economic landscape.
“Many lenders have been reducing deals with some reductions reaching up to 0.85 percentage points before today’s announcement. This competitive posturing ahead of the decision is a calculated response to the dual pressures of the market and the evolving expectations of monetary policy.
“The initial aggressive rate cuts by lenders since January and before have been sparked by the market’s bet on stabilised borrowing costs.
“This has evidently led to a mini war of rates, benefitting consumers but also revealing the market’s sensitivity to policy signals.
“Without the certainty of a further cut it seems unlikely that mortgage rates can fall much further.
“The rise in swap rates—an essential benchmark for pricing fixed-rate mortgages—signifies mounting pressures that could reverse the recent trend of falling mortgage rates.
“This scenario not only affects borrowers but also has broader implications for housing market activity and, by extension, the economy.
“The recent dip in mortgage rates and the subsequent uplift in housing market activity may be signs of being out of the woods or simply just a momentary reprieve during a period marked by higher interest rates and cautious consumer behaviour.
“The slowdown in residential transactions towards the end of 2023, as reported by HMRC yesterday, illustrates the tangible impact these conditions have on the property market.
“Speculation about rate cuts later in the year fuels optimism for a more buoyant housing market, potentially leading to increased affordability for homebuyers.
“However, the path forward is fraught with uncertainty. Fixed-rate mortgages, which have so far benefited from a more competitive environment, may face upward pressure if the anticipated easing of monetary policy does not materialise as expected.
“Today’s hold in rates marks the first of many decisions this year that will be heavily scrutinised for signs that a drop is on its way.
“For now, borrowers can only play the cards they are dealt and if you are looking to buy or sell, seeking professional mortgage advice can help you understand what’s on offer from the market and whether its affordable for your unique circumstances.”
Andrew Gething, managing director of MorganAsh:
“The decision to hold rates is as much a response to sticky inflation, wage growth and macro-challenges, as it is a way to tell businesses and economists to hold its horses.
“There’s no doubt that the overall sentiment has improved massively, with a positive outlook for the second half of the year.
“However, the bank has to carefully balance an improving picture with a re-acceleration in spending and any potential external shocks.
“Before any potential cut, businesses across financial services in particular must stay alive to the challenges facing their customers now in a higher interest environment.
“The potential for customers to find themselves in a vulnerable position is very real as research continues to show the proven link between lower income and income pressures with poor health.
“With Consumer Duty in force and the FCA prioritising a review of vulnerability across firms, businesses must have eyes on this situation, as well ensuring that they the necessary data and intelligence to prove to the regulator that they are delivering the right outcomes.
“That’s particularly true for the shocking number of firms still reporting that they have no vulnerable customers.
“Affordability remains a key challenge for the coming year, especially with high levels of mortgage maturity still expected.
“The potential impact this could have on available income and both health and lifestyle pressures is significant.
“Six months on from coming into force, Consumer Duty and the treatment of vulnerable customers is still an absolute priority – the regulator is certainly making sure of it.”
Neil Rudge, head of enterprise at Shawbrook
“Business leaders can take comfort in the MPC’s decision and that the unexpected rise in inflation during January did not prompt a rate hike.
“The macroeconomic landscape is currently challenging to interpret, with the optimism from anticipated rate cuts at the end of last year somewhat subdued by last month’s CPI reading.
“Both business owners and policymakers will be closely monitoring whether this inflationary stubbornness persists, as well as potential economic headwinds caused by the challenges in the Middle East.
“Despite the uncertainty, SMEs can draw optimism from recent data indicating consumer confidence is at its highest level in two years.
“This positive sentiment is expected to translate into increased sales over the next 12 months for many SMEs, which would boost revenues and foster a more optimistic business environment.”
Matt Surridge, sales director at MPowered Mortgages:
“The Bank of England’s decision to hold the base rate at 5.25% today sends a strong message of confidence in the economic turnaround, which is great news for those eyeing their next move in the housing market.
“Although December saw a modest increase in inflation to 4%, up from 3.9% in November, with energy bills projected to fall, the prospect of rate cuts later this year is increasingly likely, with some forecasts suggesting rates could drop to 3% by 2025.
“We must not overlook that many borrowers are battling with increased living costs.
“Despite a slowdown in inflation, mortgage rates are still higher than the historical lows of recent years.
“In this economic landscape, the role of brokers and lenders in actively aiding borrowers and leveraging their expertise for the best outcomes is more important than ever.
“At MPowered Mortgages, our AI and data-driven process can rapidly process complex applications to provide certainty and control to consumers throughout a more challenging period.”
Nick Leeming, chairman of Jackson-Stops:
“The Bank’s decision to stick to its knitting and hold rates was largely expected by the market, but is still welcome news.
“While bringing interest rates down does encourage greater borrowing which in turn stimulates greater activity, it is important that the Bank of England does whatever is necessary to avoid fuelling inflation.
“The upside of Bank of England’s inaction today provides stability to the market, allowing buyer and seller confidence to build after a subdued year of activity.
“Across the Jackson-Stops network we are already seeing a positive uptick in the number of prospective buyers and new properties coming onto the market in January, which will hopefully pave the way for a busy spring.
“Though the market will remain cautious in its optimism; only as the year progresses will we be able to determine more clearly how buyers behaviour will respond.
“The prospect of a General Election, and interest rates staying high, by relative standards, is likely to play on the minds of those considering how best to time their next move.
“But the property market must take some comfort in its own resilience, having navigated far higher interest rates than we see today, and are well placed to do the same again.”
Andrew Montlake, managing director at Coreco:
“The Bank of England’s choice to keep the base rate unchanged, while cautious, might be a missed opportunity to invigorate the economy and ease the anxiety of mortgage holders across the country.
“The current financial landscape, fraught with uncertainties, may have benefitted from more assertive action in the form of a rate cut, especially as there is an expectation that inflation will soon fall to its 2% target.
“Holding the rate steady, though seemingly prudent, overlooks the potential stimulus that a cut could offer to both the housing market and wider economic activity, and it is worrying that two members of the Committee voted to increase rates further, in a move that looks increasingly out of touch with the average consumer.
“Interestingly, this is the first three-way split since 2008, which illuminates the differing opinions at the very heart of the Bank.
“Whilst we acknowledge the stability this decision brings, potential growth and relief for consumers has been spurned.”
Akhil Mair, director at Our Mortgage Broker:
“The Bank of England’s decision to maintain interest rates at 5.25% has revealed a rare three-way split within the committee.
“With two members pushing for hikes, one advocating for a cut, and the rest opting for the status quo, uncertainty looms large.
“Looking ahead to the March 21 meeting, market predictions of two to six rate cuts in 2024 suggest a volatile landscape ahead.
“This decision, while seemingly cautious, underscores the fragility of our economic balance and the growing discord within monetary policy circles.”
Richard Thompson, director at Abbeydale Mortgages:
“I would have preferred a reduction of 0.25%. In my opinion, such a move could have instilled greater confidence in the market by indicating a gradual decline in interest rates.
“Additionally, I believe it would have stimulated an increase in the number of first-time buyers which I feel is required given the recent period of subdued house transactions.”
Gareth Davies, director at South Coast Mortgage Services:
“No massive shocks here, and a wise move to keep things as they are for now in my opinion.
“What slightly concerns me is the two members voted for a rate increase.
“Anyone willing to wager that those two members don’t have a mortgage on their homes?”
Amit Patel, adviser at Trinity Finance:
“Swati Dhingra deserves all the plaudits for being the only member to vote for a rate reduction.
“She clearly understands the pain being felt by millions of households and thousands of businesses up and down the country.
” Jonathan Haskel and Catherine L Mann, in contrast, are completely deluded.
“We need a complete overhaul of the dynamics of the MPC, which should be a fairer representation of society.”
Graham Cox, founder at Self Employed Mortgage Hub:
“No great surprise rates have been left unchanged. I fear the reluctance to start cutting rates now will prove a mistake in a few months time.
“The economy is on a knife-edge right now. With business insolvencies and liquidations increasing rapidly, we really need proactive steps such as base rate cuts to get the UK economy growing again.”
Riz Malik, founder & director at R3 Mortgages;
“The decision to maintain the current rate was anticipated.
“Nonetheless, it’s noteworthy that within the Monetary Policy Committee, two members are advocating for a rate hike, while one prefers a reduction to 5%.
“The Bank’s projection that the target of 2% will be achieved by the second quarter is a positive indicator that may support the possibility of early mortgage rate reductions.”
Craig Fish, director at Lodestone Mortgages & Protection:
“A fully expected but disappointing decision. It’s interesting to note that two members continued to vote for an increase on the basis of worries over core and services inflation, when the prediction is that inflation will hit target by April.
“It’s good to see at least one member of the MPC is on the side of consumers and businesses. I fully expect the first rate cut to be seen in May.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“Today’s meeting was not unexpected, with six in favour of a hold, two in favour of an increase and one lone soldier voting for a reduction.
“The next few months’ inflation figures will determine if any reductions in the Base Rate will be forthcoming.”
Ranald Mitchell, director at Charwin Private Clients:
“This is a hugely disappointing decision from the Bank of England, namely choosing to hold rates rather than provide a much needed reduction.
“Given they are forecasting the 2% inflation target to be achieved by April, easing rates now would unlikely derail this, whilst at the same time, provide a much needed stimulus to the economy and consumer confidence.
“What’s also worrying is the disagreement within the committee as to what to do and when, with voting pulling in three different directions.”
Justin Moy, managing director at EHF Mortgages:
“Keeping the base rate at 5.25% was definitely the right output, what is more interesting is to see how he MPC voted, as that can give more indication about future rate changes, which as mortgage owners our clients are concerned about.
“The mixture of opinions from the MPC members still doesn’t make the outlook that clear, but the first looking to cut rates is a step forward for the positive, and the next few months will give more clues to the rest of 2024.
“We may see mortgage rates wobble a bit further over the next week or two as a result of today’s lack of change.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“This is a common sense decision which will be welcomed by everyone.
“Quite how far out of touch two of the committee are to vote to increase the rate is baffling.
“They clearly have some personal agenda or interests they are putting above the benefits of the economy.”
Gary Bush, financial adviser at MortgageShop.com:
“As planned the Bank of England have held rates, mortgage holders take a deep breath every time the committee meet at the moment.”
Ben Perks, managing director at Orchard Financial Advisers:
“In December, Andrew Bailey said it is really too early to start speculating about cutting interest rates.
“So as expected, the MPC have opted to hold Bank Rate at 5.25%.
“Whilst it would have been wonderful to see a reduction, by holding they have provided some stability and certainty when we need it most.
“The markets should react well to the holding of the rate, and this should help stabilise swap rates, which in turn will improve the mortgage rates available to borrowers.
“So, whilst we aren’t punching the air with joy, this is a welcome announcement.
“Despite the slight uptick in inflation to 4%, the outlook is positive. Inflation has dropped from an 11% high in October 2022, and should reduce further, so the pressure will be mounting for a reduction in rate at the next meeting.
“Holding the rate today provides stability, but a reduction would provide the much-needed catalyst that sparks the UK economy back into life.”
Mike Staton, director at Staton Mortgages:
“Anybody that thought anything other than this outcome was going to happen clearly isn’t on this planet.
“A slight blip in inflation over the christmas party period is exactly that, a blip.
“The Bank of England didn’t think it necessary to increase rates and I strongly believe we will start to see reductions in March, which will be music to the ears of borrowers.”
Hannah Bashford, director at Model Financial Solutions:
“We had expected the base rate to be held and this is good news for now.
“The interesting thing is there has now been a vote to cut rates which could be positive for future mortgage rates, but with inflation targets still hanging in the balance I still think we’re in for a rollercoaster year.”
Rohit Kohli, director at The Mortgage Stop:
“As expected, we have a decision to hold rates from the Bank of England.
“The updated prediction that we may hit the 2% target by April is positive and we have one memeber feeling like it is the time to cut rates now.
“What is worrying is the fact that two members felt another rate rise was needed.
“Given the struggles that millions are facing, the recent economic stats that show the economy needs a boost and that even Tory MP’s cant pay their mortgages, surely these members need to realise a further rise will likely cause more harm than good.”
Luke Thompson, director at PAB Wealth Management:
“The fact that those who were against keeping the base rate where it is are still split on if the rate should go up or down show’s where the committee is at this time and makes me feel it won’t be the spring when we see the first base rate cut as some have predicted.
“There are still plenty of inflationary pressures that need to be dealt with in the coming months and let’s not forget that we still haven’t gotten to the magic 2%.
“Those hoping for a base rate cut in the near future to help with the rising costs could still be waiting until the end of the year for some base rate relief in my opinion.”
Jack Tutton, director at SJ Mortgages:
“Early optimism of a cut in the base rate this spring has been diluted today with the base rate being held at 5.25%, with market analysts expecting it to remain at this level until at least the summer.
“There does however appear to be an ongoing divide within the committee as to the best way forward, two members still voting to increase the base rate which would have been a surprise to many.”
Jonathan Gordon, director of wealth management at IP Global:
“As a property investment professional, the Bank of England’s decision to hold the base rate at 5.25% brings mixed feelings.
“While a pause offers some welcome stability, the split vote highlights lingering concerns about inflation.
“On a positive note, if further rate rises are delayed, it could lead to a slight dip in fixed-rate mortgages, making new investments or refinancing existing ones more attractive.”
Michelle Lawson, director at Lawson Financial:
“A widely expected hold but a great indicator that the tides are turning with one commmittee member voting for a cut.
“All eyes are now on inflation in a couple of weeks as this will be a greater indicator of what comes next.
“A cut would have been a great boost to put some money back into people’s pockets however as the underlying cause of inflation is goods- and service-related, this equally could have had an adverse effect.”
Ken James, director at Contractor Mortgage Services:
“Taming the UK economy has it ever been harder than it is now, the pressure to reduce rates was pushed to one side and the decision to hold rates at 5.25% has been the overriding choice made at todays meeting.
“Whilst there was some who viewed an increase as the right way to go, the majority felt that holding was a better option, and that enough had been done already to dampen the UK markets.
“Was this a missed opportunity to make a bold statement of intent, that we are on the road to recovery.
“Holding the rate may be seen by some as a win giving some stability to the market, and with the inflation figures set to continue their downward trend, will the news have a positive impact on swap rates? Will lenders continue to factor in reductions helping the UK mortgage market in its resurgence from the ashes of 2022/2023?
“A lot remains to be seen, and there are possibly more questions than answers right now, but the way things are looking BOE rate reductions may be closer than we thought.”
Elliott Culley, director at Switch Mortgage Finance:
“Great news that the base rate has been held for a further month.
“There was initial talk that the recent rise in inflation could have fuelled a rate hike.
“The most important part of this announcement is the language around the decision.
“Language seems to be changing and members of the MPC are now talking about rate cuts rather than further tightening.”
Ben Waugh, managing director of more2life:
“The decision to hold the base rate at 5.25% serves as a further signal that we are navigating beyond the difficulties of recent years.
“Confidence is building, and as lenders compete for borrowers, both those remortgaging and first-time buyers alike should feel encouraged to seize the opportunities ahead.
“There’s a general feeling that we have weathered the storm, and even as some lenders announce rate increases, borrowers should not feel intimidated.
“Consulting a professional adviser to comprehensively assess all options will ensure customers can make an informed decision.
“This is particularly true for the over-55s, who may be looking for a tailored financial solution to gift funds to loved ones or to top up their disposable income.”
Nicholas Hyett, investment manager at Wealth Club:
“Before Christmas investors had built up a picture of central bankers as trigger happy rate cutters, just waiting for the first excuse to get rates falling once again.
“Stock markets shot up as a result, and mortgage rates have started to fall.
Well, there’s little evidence central bankers are rate cut hungry in today’s MPC report.
“Rates were unchanged as expected, but two MPC members voted to increase rates – arguing that monetary policy need to be restrictive for longer to get core inflation back under control.
“There’s a certain logic to that. The economy isn’t glowing. But it’s not screaming in distress either.
“Growth is ping-ponging around zero, and wage growth is slowing but still moving upwards and rising energy prices could yet move inflation higher again later in the year.
“But monetary policy is a supertanker not a speedboat – leave a change of direction too late and the economy will hit the rocks before central bankers can get it to slow.”
Mark Tosetti, group partnerships director at Movera:
“It comes as no surprise that the Bank of England has held the bank rate at 5.25% again this month.
“But it is disappointing that it is only forecasting inflation to fall temporarily to the 2% target in 2024 Q2 before increasing again in Q3 and Q4.
“However, the announcement has offered some rays of hope in that the MPC’s projections are conditioned on a market-implied path for bank rate that declines from 5.25% to around 3.25% by the end of the forecast period, almost one percentage point lower on average than in the November Report.
“How will this affect the home-moving market? Mortgage rates have been tumbling and, if the Bank of England bank rate falls, we could see more mortgage rates cuts which would be no small relief for both new borrowers, and homeowners looking to remortgage.
“However, we mustn’t forget the many UK households facing heightened mortgage costs and those suffering from the brunt of the cost-of-living crisis.
“In the industry we must all pull together to support homebuyers as the situation evolves. As ever, our focus at Movera will be on providing expedient service for those looking to move or remortgage this year.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“Holding the base rate at 5.25% is good news for people with savings, who will benefit from the higher interest rates.
“Depending on what inflation does, we are unlikely to see a cut in the base rate before the summer, when lenders will adjust their interest rates and savers will get less bang for their buck.
“It’s not great news, however, for people on SVRs who were hoping for a drop in interest rates.
“It’s particularly tough on older generations and mortgage prisoners struggling to meet their mortgage payments.”
Mark Michaelides, Molo’s VP of strategy:
“The Bank of England’s decision to hold current interest rates at 5.25% is not a surprise and demonstrates a cautious approach amid the latest UK inflation data.
“We continue to believe rates have peaked and this decision will ensure further stability in lending conditions.
“We’ve seen a noticeable uptick in applications in both enquiries and applications in recent weeks reflecting a far more positive mood in the market which is encouraging for landlords”
Chris Storey, chief commercial officer at Atom bank:
“As expected we haven’t seen any movement in base rate today, however there are encouraging signs in the mortgage market as inflation falls and pressure eases on borrowers.
“The number of new mortgages approved in December stood at a six month high, and the average interest rate for newly drawn mortgages has dropped for the first time in more than two years, in a sign that things are improving.
“Expectations of base rate cuts have fuelled a rapid fall in fixed mortgage rates as lenders fight to win business.
“Although the burst of cuts in the new year has eased, we should see mortgage rates fall further, however there is a limit on how low lenders can go.
“Those priced too competitively risk putting pressure on service levels and we have already seen some lenders price up or pull products in recent weeks to manage volume.
“Today’s decision should be good news for savers. While we have passed the peak, savers still have good options out there, with a range of strong fixed rate deals still available.
“Looking at easy access savings, the big banks continue to offer rates below 2.00%, and we’re unlikely to see this change any time soon.
“Our own analysis shows that savers with high street banks are potentially missing out on up to £346 worth of interest a year, as many challengers offer superior rates.
“With the expectation that the base rate will be cut later this year, savings rates may follow suit, so savers should be proactive, flexible and keep an eye on movements.”
Karl Wilkinson, CEO at Access Financial Services:
“It’s only by a majority of three MPC members that the bank rate has remained at 5.25%, so opinion is still divided on what’s best moving forward.
“I don’t think anyone will be surprised if we stick at 5.25% until the summer. Hopefully then inflation will have calmed, and we can see a lower base rate.
“That said, inflation is forecast to drop then increase again in Q3 and Q4, so we have a choppy year ahead of us”.
