Bank of England interest rate decision – Comments from mortgage brokers, IFAs and wealth managers

by | Feb 2, 2023

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The Bank of England has raised the base rate to 4%. The minutes report that the MPC believes inflation has peaked. Newspage asked mortgage brokers, wealth managers and IFAs about what today’s hike and the minutes mean for borrowers, savers, investors (and the broader economy).

Peter Lowman, Chief Investment Officer at Investment Quorum: “For investors this would seem a very appropriate time to make those ISA subscriptions before the end of this tax year if they have not already done so, and take advantage of the yields currently on offer in the fixed income market along with those falls from equity prices seen in 2022. This year is likely to be a good year for markets but a trickier year for the economy. Whilst it is expected that inflation will fall throughout the remainder of the year, it will remain above central bank targets and therefore have a continued negative effect on household income. It is likely that we have seen the peak for UK inflation and it will not be long before we hear that the Bank of England’s current monetary policy tightening programme is near an end.”

Alex Reynolds, Partner at Advies Private Clients: “An expected rise with a bit more to go over the next 3 months before we see rates plateau and then hopefully reduce towards the end of the year. Fixed rate pricing should continue to fall given the inflation threat is subsiding (though not gone) and, therefore, a positive outlook for borrowers and savers in the short term. It should hopefully give confidence to the wider economy that things will start improving towards the end of the year and 2024 looks promising.”

Fanny Snaith Owner at Fanny Snaith – Certified Money Coach: “My biggest fear is that people won’t be able to pay their mortgages and renters won’t be able to pay the increased rent due to the landlord’s mortgage payments going up. Savings rates will rise a little but will still be well below inflation. I wonder what would happen to inflation if Shell used some of their vast profit to reduce energy prices? Surely that is a better way to lower inflation rather than hitting people even harder by raising interest rates?”


Philip Dragoumis, Director and Owner at Thera Wealth Management: “The move by Threadneedle Street was as expected, but the language used in the minutes seems to suggest they might stop here. Sterling is now coming off sharply, which suggests that the market thinks the rate hiking cycle has pretty much finished.”

James Vince, Managing Director at Castle View Finance: “As predicted, the Bank of England continues to increase the base rate to combat inflation. This will have an impact on those currently on trackers, variable and discount rate mortgages as well as anyone currently on a bank’s SVR (standard variable rate). Those borrowers will see an increase in the coming days and weeks as their lenders align to the new base rate. These are difficult times for many borrowers across all credit facilities as they will see increased costs, whilst still having to cope with inflation at high levels. This becomes a compound effect for those that are currently finding times tough. Even though saving rates are increasing, the cost of inflation is still devaluing money with lower returns than the current level of inflation. Savings rates minus inflation equals the value of money.”

Steven Rowe, Director at Lucent Financial Planning: “With Bank Rate rising to 4%, that is great news for savers in traditional bank accounts. The years of 0-1% savings rates are now in the past. However, investors in UK fixed interest securities will surely see their capital values decline as yields inevitably rise to counter the risk-free rate rising… unless the rise was already priced in. Inevitably, owning equities will prove a long-term haven from rising inflation and the pursuant interest rate increases. Sure, businesses will have to adapt to higher borrowing costs which are the remedy to the high inflation rates that have also caused businesses to be clobbered by higher employment costs. But business owners and managing directors still have their personal goals and they need to make money. Thus, companies will, on average make money and shareholders will benefit.”


Amit Patel, Adviser at Trinity Finance: “The Bank of England are massively out of touch with the public and everyday businesses. This announcement will yet again penalise ordinary working people who can least afford it. The IMF has already predicted the UK economy will contract by 0.6% this year. Sanctions hit-Russia is predicted to do better than the UK. I say it’s time to cut interest rates not raise them.”

Wes Wilkes, CEO at IronMarket: “This latest rise was consensus and so was already largely priced into markets. It’s a tough pill to swallow for borrowers but one we need to take to avoid letting inflation come back too early. The rhetoric was interesting and the FTSE 250 has reacted as if it feels we’re very close to the end of rises in this cycle now. If we have further falls in the inflation numbers this month, we can expect a potentially softer response by the Bank of England next month too, such is the fragility of the UK economy.”

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