Bank of England holds base rate at 5.25%

The Bank of England’s Monetary Policy Committee (MPC) has voted to hold the base rate at 5.25% for a fifth consecutive time.

After 14 rises, the MPC first voted to hold the rate in September 2023. Yesterday saw lower-than-expected inflation figures, which peaked at 11.1% in November 2022, but still remain some way above the Bank’s 2% target.

Bank of England Governor Andrew Bailey has previously said the Bank would wait for firm evidence that inflation was under control before it cuts rates.

Nicholas Mendes, mortgage technical manager at John Charcol, said: “The Bank of England had already indicated that there would be no surprise rate cut this month, but it is anticipated that the first reduction will happen imminently.

“Market sentiment, however, suggests that any reduction in the bank rate is not likely until at least June, with a growing proportion of investors now eyeing August.

“This projection also takes into consideration the movements of the US market and the historical tendency for decisions to align with those of the Federal Reserve, which hadn’t cut rates yesterday also.

“Markets have reacted positively following yesterday’s ONS inflation data, with NatWest quick to reprice downward on their 5-year fixed products.

“I expect similar moves by other lenders over the next fortnight as confidence slowly filters back into the market.

“This won’t be an overnight success unfortunately, but there is no reason why we should expect to see a 5-year fixed rate sub 4% based on current pricing in the not-too-distant future.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With inflation dipping to 3.4 per cent, speculation is growing as to when the Bank of England will start cutting interest rates. It is time for the rate setters to be bold and start reducing rates at the next meeting, increasing borrower confidence and giving the housing market a welcome boost. The evidence suggests we are edging closer to a rate cut. At the last meeting, six members of the Monetary Policy Committee voted for no change in rates, two wanted an increase and one a rate reduction. This time around, eight voted to hold rates, with one voting for a quarter-point reduction.

“We expect base rate to be close to 4 per cent by the end of the year, assuming inflation continues to move towards its 2 per cent target. This would come as welcome news for borrowers struggling with affordability. As far as mortgage pricing is concerned, what the Bank of England does with base rate is only part of the picture. If Swap rates, which underpin the pricing of fixed-rate mortgages, edge further downwards, then lenders will introduce cheaper mortgage rates, increasing the choice for borrowers at more palatable pricing. Lenders are certainly keen to lend and want to do more business after a disappointing 2023.”

Nathan Emerson, CEO of Propertymark, said: “The Bank of England issued an optimistic projection last month that inflation could fall back down to pre Covid-19 levels by this summer. There are signs that interest rates are not deterring people from buying their first home. Propertymark’s own Housing Insight Report found that there has been a 120 per cent increase in the number of potential buyers registered so now that optimism and momentum is gaining in the market, we now need to see interest rates start to fall so that buyers’ affordability can further increase, opening up the market and providing more options for those looking to move home.”

Andrew Gething, managing director of MorganAsh, said: “While many would have hoped for a cut, holding base rate at 5.25% was always the most likely outcome. Even with positive headlines around inflation yesterday, the MPC will have one eye on high services inflation, as well as number of macro challenges that could still upset the apple cart.

“Although a fifth consecutive hold brings stability, it also keeps interest rates at an elevated level – adding further pressure onto customers and potentially pushing many into a vulnerable position. With predictions of August bringing the first cut to base rate, this strain on households is only set to continue. It’s no wonder then that the FCA has this week announced its review of how firms approach consumer vulnerability, especially as many continue to say they have few – or even zero – vulnerable customers.

“If the base rate does fall in August, as many predict, firms will have to report on outcomes for vulnerable customers ahead of this – with July marking the one-year anniversary of Consumer Duty. A proactive approach to assessing all clients is absolutely critical in generating the necessary data firms need for the management information and reporting the regulator will require.”

Reece Beddall, Sales & Marketing Director, said: “Although there has been some recent volatility in the mortgage market due to swap rate movements, borrowers should feel assured that it is not at the level we witnessed following the mini-budget back in 2022. The decision to hold rates for the fifth consecutive month today and inflation falling to its lowest level in over two years should also give the market more confidence that we’re closer than ever to rates dropping and be taken as a hopeful sign that more stability will return to the market.

“For those who are still worried about how they can climb onto the property ladder as the cost of living crisis continues to bite, or working out what’s the best option for them as they approach the end of their fixed-rate deal, remember that help is always at hand. We, as an industry, are here to signpost customers to the best available solutions catered to their unique circumstances.”

Nick Leeming, Chairman of Jackson-Stops, said: “Today’s decision to hold rates was widely expected but could suggest we are finally reaching the light at the end of the tunnel. Optimistic predictions are hinting that the Bank of England may be on course to begin bringing the base rate down as early as May.

“The reason for this greater positivity is that the battle against inflation is being won quicker than expected, but putting the UK on a more stable economic footing remains a marathon not a sprint. Given the close link between interest rates and monthly mortgage payments, current rates have challenged affordability, particularly at the lower end of the market. But holding rates offers a steady foundation that should allow the property market to build upon the cautious momentum we’ve witnessed in recent months.

“Across the Jackson-Stops network in February we saw an uplift month-on-month in appraisals, listings and exchanges, as well as a consistent number of prospective buyer enquiries year-on-year. Regional hotspots for Jackson-Stops such as Barnstaple, Chelmsford, Newmarket and Sevenoaks, saw a significant uptick in new buyer enquiries compared to new instructions in February, readying the market for a flurry of activity in the Spring.”

Arjan Verbeek, CEO of Perenna, said: “Despite inflation falling in February, consumers are still so reliant on factors outside of their control. Even with a stable, albeit high, base rate, the mortgage market remains turbulent as new mortgage deals are typically on offer for just over a few weeks1, keeping consumers in a constant state of uncertainty.

“Consumers will always be at the whims of factors outside their control when reliant on incumbent mortgage products. For true change, we need policymakers and the wider mortgage market to collaborate and work together for a better future, highlighting the benefits that long-term fixed-rate mortgages bring.”

Matthew Kimber, CEO of Molo said: “With UK inflation hitting a two-and-a-half-year low at 3.4% in February, the Bank of England’s decision to keep interest rates at 5.25% reflects a cautious stance amid ongoing economic uncertainties. While stability in lending conditions offers borrowers confidence in mortgage rates, it also reflects the Bank’s vigilance towards economic recovery and inflation control.

For borrowers, the unchanged interest rates mean stable mortgage conditions, ensuring financial security but potentially missing out on cost reductions. It supports financial planning but necessitates monitoring future economic trends for potential affordability impacts”

Joe Pepper, UK Chief Executive Officer, PEXA, said: “Today’s decision to hold the base rate will understandably be seen as a disappointment for borrowers. Inflation is plunging faster than expected, and the economy remains in recession. The Bank is clearly still on a conservative footing.

“Combined with the Spring Budget, which was more or less devoid of any meaningful policies when it came to property, all this does is exacerbate an already lacklustre housing market with borrowers reluctant to remortgage, or unable to borrow enough. This is creating a build-up of pressure in the market, and when rates do finally drop, we will see a spike in activity which, while positive for the market, will put hard-pressed conveyancers under even greater stress as the system creaks under the strain.

“There is a positive move towards private investment from the sector itself to rectify this, but we need commitment from the government to support reform if we’re going to deliver the digital transformation at the speed and scale at which it is required.”

Ben Thompson, Deputy CEO at Mortgage Advice Bureau said: “It was always likely going to be too soon for rate cuts, and an unchanged rate is the next best thing. As inflation continues its downward trend, all eyes will be on the voting intentions of the Bank of England’s Monetary Policy Committee. With just one member voting for a rate cut this time around, it might take a little longer for momentum to build toward base rate cuts.

“The good news is that mortgage rates are lower than they were this time last year. Inflation continues to slow, and we’re edging ever closer to a base rate cut, with optimism remaining that more lenders will look to lower their rates even further. Those looking to get on the property ladder should start getting mortgage ready by speaking with a broker. Homeowners looking to remortgage should also begin to look at what deals are available.”

Chris Little, Chief Revenue Officer, finova, said: “After six consecutive months, the base rate is still fixed at 5.25%, a sign that the volatile months of 2023 are hopefully in the rear-view mirror. As the market heats up, lenders could be incentivised to offer competitive rates, which may enable first-time buyers to access more affordable deals. Equally, with inflation falling further than the market expected, the price hikes we’re currently seeing may well be a temporary blip, with rates slowly coming back down over the coming months.

“In recent days, the average availability of a mortgage product has dropped as low as 15 days, underlining an essential fact: in a dynamic market, speed is key. As such, lenders should take full advantage of technology to provide truly tailored pricing, creating a scenario where borrowers can access the most affordable rates without risking a lender’s liabilities. The pandemic kickstarted a tech revolution in our industry, but there is still work to be done. The future is real-time pricing that can adapt to market trends at speed – and the way to get there is by investing in tech early on.”

Ben Perks, Managing Director at Orchard Financial Advisers said: “Today’s decision is not just a hold, it’s a stranglehold. Borrowers are under immense pressure. The Bank of England seems totally out of touch with what the public are going through. Today was an opportunity to take the pressure off borrowers, and it’s so disappointing that they haven’t had the bottle to do it and the cost of borrowing will remain at the highest level for 16 years. Those in power keep talking about the 2% inflation target like it’s some sort of magical figure that will fix all the country’s problems overnight, but the reality is it’s not. There will still be a long way to go. So, who cares if we hit 2% in May or August when people are struggling today? Provide the respite people need, when they need it.”

Michael Haupt, Owner / Adviser at Tomorrow Mortgages said: “Today’s decision by the Bank of England was expected but will leave many borrowers and homeowners, who would have been hoping for a rate cut, hugely disappointed. However, with yesterday’s positive news regarding inflation and for the first time in this rate cycle, no MPC member voting for a rate increase, hopefully the Bank of England will soon take the opportunity to reduce the Base Rate and restore some much needed hope and confidence.”

Lee Gathercole, Co-Founder at Rebus Financial Services said: “No surprises here at all. The MPC have once again erred on the side of caution. There are so many people out there struggling to repay their mortgage that the MPC isn’t living in the real world. There surely should be pressure now to make rate cuts. I would be quite frustrated if the next meeting is to hold once again after positive inflation news.”

Rohit Kohli, Director at The Mortgage Stop said: “This decision is as disappointing as it was predictable. With the lowest inflation since September 2021, mortgage arrears increasing, personal debt reaching record levels and the economy on a cliff edge you could have been forgiven for hoping that the MPC would show some bottle and leadership to drive a confidence boost that everyone needs. Instead, we get more of the same caution and dithering which will forever remain when the bank is only focused on one thing, namely driving inflation down to 2% come what may.”

Jack Tutton, Director at SJ Mortgages said: “I think the Bank of England may have missed a trick by not reducing the base rate today. Only one committee member has voted to reduce the base rate. With the greater fall in inflation than expected for the year to February, they could have given more confidence in the UK economy by making a 0.25% reduction. It is interesting to read that there were no votes this time around to increase the base rate. Hopefully this is a sign that a cut is coming soon.”

Gary Bush, Financial Adviser at said: “The Bank of England takes the coward’s way out by just leaving the base rate at 5.25% again. The population needed a break but they didn’t get it from a committee of ostriches. With the inflation data this week coming in lower than expected, people in the know would have seen the record insolvencies, mortgage arrears, and reliance on credit cards to make monthly bills and acknowledged that a .25%, as a minimum, would have helped households. Sadly, like the government, the BOE couldn’t care less about the people at the bottom of the food chain it seems.”

Riz Malik, Director at R3 Mortgages said: “Inflation has fallen over 50% and the economy is on its knees. This is the wrong decision from a Monetary Policy Committee who are out of touch with reality. Dr Bernanke’s report on their forecasting is expected sometime in spring but that may be too late for the UK economy.”

Darryl Dhoffer, Adviser at The Mortgage Expert said: “The Bank of England has once again left borrowers in the lurch. The Bank of England’s inaction today is a slap in the face to struggling families. While the decision itself wasn’t a shock, it does little to address the very real pain inflicted by high mortgage rates. Household budgets are stretched thin, and the wait-and-see approach feels more like a shrug than a solution. The Bank of England needs to wake up and smell the coffee. People are hurting and waiting for some relief from high mortgage rates. It’s time to take action and consider a rate cut to ease the burden on everyday people.”

Hannah Bashford, Director at Model Financial Solutions said: “The base rate has been held again which is disappointing, but to be expected. What is great news is that this is the first time there have been no votes to raise the base rate, which is a good indication that we are edging closer to where we need to be to cut interest rates and give UK households the help they need.”

Andy Keehner, Managing Director, Finanze Property at Finanze Group said: “This was to be expected. It’s a little too early to react to the drop in inflation just yet.”

Craig Fish, Director at Lodestone Mortgages & Protection said: “Whilst a cut would have been nice, it wasn’t expected. It’s good to see that some sense has returned with no members of the committee voting for an increase. The hope now is that the MPC stop acting like a herd of Federal Reserve-following sheep, stand on their own two feet and make their next decision for the benefit of the UK. For the avoidance of doubt that needs to be a cut.”

Justin Moy, Managing Director at EHF Mortgages said: “Keeping the base rate on hold was always the likely outcome, but the shift of support within ther MPC is more significant, and sends the right tone of message to the markets. Increases are definititely off the table, talk of 2 or even 3 rate cuts in 2024 have surfaced, and its time that the Swap markets reacted positively to this signal. Inflation has one way to go over the coming months, so the base rate should follow right behind.”

Lewis Shaw, Owner and Mortgage Expert at Shaw Financial Services said: “This is as positive as it could have been. We know the Bank of England is waiting on the US Fed to cut rates before they take the plunge. However, with no votes to increase bank rate, at least, we’re now on the cusp of a pivot, which sets us up for rate cuts in the not-too-distant future. Even with the base rate staying put for the moment, it’s almost certain that in the coming few weeks, we’ll see mortgage rates begin to reduce as money markets increase their expectation of a cut. This is good news for mortgage holders.”

Andrew Montlake, Managing Director at Coreco said: “Whilst the outcome of the latest MPC meeting was predictable, there is some comfort in that at least there was no member of the Committee voting for a rise this month.“Whilst this shift is a clear indication of future direction of travel, it is nonetheless another opportunity missed for an early rate cut which is something the country is crying out for.“After the positive inflation news yesterday, and despite the fact we are not out of the woods just yet, the Bank is yet again putting itself into a position of having to be reactive later rather than being proactive earlier, with people all over the country being held to ransom under the weight of higher interest rates.“We should hopefully see some downward movement in SWAP rates now, which will help give mortgage lenders the room to return to a more competitive mortgage rate environment”.”

Akhil Mair, Director at Our Mortgage Broker said: “The Bank of England keeps the base rate steady at 5.25% for another month. But here’s the deal: waiting for others to act first isn’t the game plan. Time for the bank of England to make a move and shape the future.”

Graham Cox, Director at SEMH Self-Employed Mortgages said: “No surprise that the base rate was left unchanged. But money markets will take encouragement that there are no longer any MPC hawks still voting for an increase, and indeed one member voted for a cut. It’s surely only a matter of time now before we see one, perhaps as early as May. In the meantime, mortgage rates will hopefully start falling again on the back of yesterday’s better than expected inflation figures.”

Dariusz Karpowicz, Director at Albion Financial Advice said: “The Bank of England’s decision to keep rates on hold at 5.25% didn’t exactly shock the financial world. This move was largely anticipated by analysts and experts alike. With an 8–1 vote, it’s clear there’s consensus for stability, save for one maverick member favoUring a cut. This sets the stage for a hopeful glance towards the summer: should inflation continue its retreat, we might just see the Bank of England usher in a much-awaited rate reduction. Here’s to lower rates on the horizon, guided by cautious optimism and economic indicators.”

Luke Thompson, Director at PAB Wealth Management said: “This is precisely what was expected and the markets appear to have already priced it in. In the coming weeks, if the data regarding inflation remains consistent and if the next figures end up where we expect them to be I suspect the markets will start pricing in for a first base rate cut in June. I felt that with the way the data has been going more than one member of the MPC may vote for a cut in the rate but I still think that ratesetters had their fingers burned when they were far too slow to react to rising inflation in 2021. However, as we have seen it will only take one or two poor pieces of economic data or an escalation of the conflict in the Red Sea for the markets to be spooked again and for borrowing rates to rise. We are not out of the woods yet when it comes to interest rate cuts this year.”

Elliott Culley, Director at Switch Mortgage Finance said: “The decision to hold rates comes as no surprise. Only one member thought it a good idea to reduce rates, which is a little worrying. With no meeting until May, we now won’t see a reduction until at least then. Let’s hope this is not too late to react, after being too late to raise rates initially.”

Rob Gill, Managing Director at Altura Mortgage Finance said: “Today’s base rate hold by the Bank of England was no surprise. The UK is in a position, and has been for a while, where the Bank of England’s credibility is more important for mortgage rates than cutting base rate. Keeping base higher for longer, and showing they are serious about fighting inflation, is the key to stable or falling mortgage rates.”

David Sharpstone, Director at CIS Mortgage Advice said: “This is really disapointing but not entirely unexectpected seeing as inflation is becoming more stable. There’s clearly more confidence in the market as SONIA swaps have dropped a little in the past week and inflation is now at 3.4%, the lowest since the Liz Truss debacle. Instead of seeing the expected fall in mortgage intrerest rates continuing this year, borrowers have watched rates steadily creeeping up. A 0.25% drop would have provided a much needed boost to the housing market.”