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Bank of England interest rates stick at 5.25%: is there light at the end of the tunnel? Mortgage and Property professionals share their reaction

by | Sep 21, 2023

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After Yesterday’s shock data which showed UK CPI inflation at its lowest level for 18 months, the Bank of England‘s Monetary Policy Committee (MPC) has certainly had cause to think hard about today’s interest rate decision and its likely impact on the economy.

With markets finding the outcome almost impossible to call ahead of the meeting, today’s announcement that rates will remain at 5.25% has huge relevance for the UK economy, for businesses and also for millions of households whose budgets are already under considerable strain due to the ongoing cost of living crisis.

Clearly, it also has huge implications for an already slowing property market and for the work of mortgage and property professionals going into Q4. With mortgage rates already having hit 6% for both two year and five year fixes before today’s announcement, the impact on affordability for those buying a home or remortgaging is still set to cause pain – although today’s news that rates have not been hiked further is undoubtedly something of a relief.

Mortgage and Property professionals have been sharing their reaction to today’s interest rate news as follows:


Graham Taylor, Managing Director at Hudson Rose said: “The decision to hold the Base Rate at 5.25% today has come as a surprise, with the majority of commentators expecting an uptick of 0.25%. Given the market had expected an increase it will be interesting to see if there is any further downward pressure on swap rates that filter through to lower priced mortgage products. However, Andrew Bailey was quick to point out that we are not out of the woods yet and there is still work to be done to get inflation under control. This leaves the door open for potential future increases.”

Simon Webb, managing director of capital markets and finance at LiveMore, said: “At last, lenders, borrowers, tenants and brokers can breathe a sigh of relief that base rate has been paused at 5.25% rather than yet another rise. It was a close call though as the MPC members voted 5 to 4 in favour, and the hawks are still vying for further rate rises to bring inflation down.

“It will be interesting to see how the money markets react as swap rates have been coming down a little lately, as have mortgage rates. Putting the brakes on base rate will be cautiously welcomed by borrowers on variable rates, those due to remortgage and people looking to buy new homes or move. But there is now a nervous wait until the next MPC meeting where the hawks may once again takeover.”


Tony Silver, Director at White House Mortgages Ltd said: “This morning, today’s BOE Interest rate decision was widely reported to be on a knife edge, following the better than anticipated news on inflation and the Fed’s decision to freeze their interest rates this month for the first time after 14 consecutive interest rate rises, it’s perhaps more prudent to look beyond today’s short term decision.

“The Uk Mortgage rates are dictated to by the Swap rates, which take a longer view on where the banks are predicting interest rates to go, whilst moving money between themselves on the money markets. Most charts I’ve seen are predicting that the UK Interest rates will remain fairly high, topping out at 5.5%, but staying in that region well into 2025, before gradually reducing down to a more palatable 3%.

“However, Mortgage lending today relies far more on a bank or building society calculation on an applicants affordability, than the 2.5 x joint or 3 + 1 that I knew when I first came into the industry some 30 years ago, or the 4.49 x joint that we often see today. More often as advisers, we are having to prepare a client to take out a mortgage in a few months time, by advising them to reduce personal debt, particularly with credit card rates around the 30% p.a. mark. Even then, I’m still having to cost mortgages over a 30-35 year term as opposed to the more traditional 25 year term that we are all used to, purely to make the mortgage affordable due to the relatively high interest rates.


“Are we likely to see the return of mortgage deals at 1,2 or 3% – not for the foreseeable future? Anything that starts with a 4 will be cheap and a 5 or 6 to be the new norm. Lenders are also being more picky with the types of properties they will lend on, with many pricing out or reducing the LTV on new build flats, thus blunting initiatives such as Deposit Unlock for FTBs. Even when we can find a lowish interest rate, often the lenders booking fee will go as high as 7%, which looks like lender greed to me.

“Interesting times, with good quality independent mortgage advice, needed by the unsuspecting general public ever more increasing. Exactly why they expect such specialised knowledge to come for free is beyond me, but that’s a discussion for another day.

“So what did the BOE decide? Interest rates were held @ 5.25%, mirroring the Fed’s decision yesterday.”


Ian Angus-Felton, Senior Mortgage & Insurance Broker and Technical Manager at Greenshoots Financial Services said: “The Bank of England’s decision to pause increases in the base rate reflects a cautious approach in a volatile economic climate. It feels like an attempt to offer some stability and reassurance to borrowers while monitoring inflation and economic recovery closely. Pausing rates is a prudent and welcome step which we hope provides some much needed stimulus for the Mortgage and Property Market.”

Tony Joannou, MD, Money Sage Ltd. said: “Maybe someone at the BOE is finally starting to wake up to the economic realities of so many rate rises in such a short space of time! For some time now the MPC has failed to look further than the current inflation figures and at the wider implications of a stuttering economy in China and Europe, increasing arrears rates on rental properties in the UK and rents pushed to an all time high.

“This coupled with business closures at the highest rate since the last recession have all been indicators of a downturn in the UK and they have stoked that fire further by increasing interest rates. Whether holding rates is enough to stop us tipping over into recession in 2024 is yet to be seen. If it doesn’t, expect the opposite reaction in 2024 with rate cut after rate cut as they try and catch up again.”


Clare Batchelor, mortgage operations manager at Wesleyan, says:“While the property market is showing more resilience than expected, there are still challenges ahead. With fewer people looking to buy than we’ve seen in previous years, the restricted supply of homes coming onto the market means increased competition among buyers to secure their ideal property. 

“Affordability also remains a big concern for many mortgage holders, particularly those who’ve enjoyed record low rates for much of their home ownership and are now experiencing a doubling or even tripling of their mortgage rates. 

“This makes it even more important for people to shop around. Mortgage providers are still offering competitive rates and using a broker can help unlock the best deal in a volatile market.”


Alan Mulligan, Managing Director Personal Financial Management at Persona Healthcare Management said: “By keeping the rate on hold it is sending a good if not positive message, hopefully this will be the point to see rates reverse to lower figures to help those with mortgages find a new deal that is more suitable to their budget.

“Lenders seem keen to reverse rates as they have been creeping down over the last two weeks, the hold on B of E base rate should give the lenders more confidence to continue. Our message as Advisers to Clients is to use our services to get the best option available from the market we deal in, consider the two-year fixed option and the keep an eye on the B of E announcements.

“At last, we are giving positive news to new and existing clients.”

Laura Bowland, Mortgage Retention Lead at first direct said: “In a refreshing turn of events, and for the first time since November 2021 the MPC has met without deciding to raise interest rates. The base rate has increased in 14 consecutive meetings, taking it from 0.1 per cent to 5.25 per cent, creating concern for those with a low mortgage rate coming to an end.

“Todays MPC decision coupled with the positive news on inflation yesterday, could be a sign the tide is turning for homeowners and those looking to purchase a home, however high household costs such as food, fuel & childcare could continue to squeeze affordability for families.”

Stuart Phillips, Mortgage Advisor at AALTO Mortgages Ltd said: “Todays news that the base rate remained at 5.25% will be welcomed by clients and may boost confidence amongst buyers waiting out the peak in rates. With lenders pricing competitively over recent months, but pricing in a 0.25% increase to fixed rates, we might see some significant drops in the next week or so as they vie for position at the top of the tables given the extra margins. Perfect timing after an extended slow period over the holidays.”

Robert Winfield, Managing Director at Chartwell Funding said: “I think most people would say they were pleasantly surprised that the base rate was held at 5.25% today. I was expecting a 0.25% rise as whilst the inflation news was OK, recent reactions from the MPC to such data have been brutal. There will be a lot of noise now about whether this is rock bottom and how soon we will bounce back, and so I will be offering a word of caution to my clients that I strongly believe that the MPC will not hesitate in raising rates again if the data dictates.

“That aside, SWAP rates have already started to tumble though and whilst the base rate is not a direct reflection on SWAPS, it is certainly a good indicator of how things may pan out. Lots of reasons to be cheerful today and let’s hope the wave of optimism in Autumn bears fruit in the winter months.”

Vikki Jefferies, Proposition Director at PRIMIS Mortgage Network, comments: Today’s decision by the Bank of England will be a welcome relief for borrowers already struggling with the cost-of-living crisis and high interest rates. This should accelerate the price war, which has seen mortgage providers lower mortgage rates to stay competitive in recent weeks, with fixed mortgage rates dropping below 5% in some cases. 

“Nonetheless, rates remain significantly elevated when compared to the rock-bottom rates of recent years, and brokers will need to help consumers adjust their expectations of what a ‘new-normal’ for interest rates may look like. It’s unlikely that rates will return to the historic lows of one and two percent any time soon, and this should now be factored into any decisions about affordability moving forward. 

“However, this is not to say that rates will not come down further, and brokers should seek to provide education and context to empower consumers to make informed decisions around products, particularly as the rate landscape continues to evolve.”

Anthony Harris, Independent Financial Adviser at national IFA firm Continuum, said: “It is clear the Bank of England are looking to keep inflation under control and their primary tool to do this is the base rate. Typically, mortgage lenders look ahead to ensure that they remain profitable in most economic environments, so base their longer-term fixed rates on where they believe interest rates will be in the years ahead. What they do not want to do is find that they are lending at lower rates than they may themselves be able to borrow, or worse still are having to offer to savers. At the same time, they want to attract customers to themselves, so will always look to be competitive.

“If the long-term outlook for interest rates is one of falling base rates from the Bank of England, then lenders are better placed themselves to offer more attractive rates now, within their 5 year+ fixed rates, meaning that as the economic outlook improves, the fixed rate deals may indeed start to fall, and the goal of sub 5% fixed rates can once more be achieved.

“The long-term fixed rates could indeed be seen as the lenders have greater confidence in where the UK rates are ultimately headed and this would be seen as a further positive sign for the UK economy.”

James W Melhuish DipPFS EFA, Financial Well-being Expert said: “Today’s decision to pause the rise in interest rates is undoubtedly a positive step in the right direction. Let’s look at this wearing the glasses of the everyday men and women of the UK. They have been told that the increase in interest rates is the antidote to high and rampant inflation. 

“With the recent headlines showing inflation slowing, the assumption, before todays announcement, was that interest rates will settle or even come down. This will be seen as good news to the people up and down the country who are anxious about the effect of interest rates on their mortgage payments.”

Gordon Milnes at Investec Real Estate commented: “Boosted by yesterday’s surprising inflation figures, this is the absolutely the right decision in the face of recent economic data. Hopefully the Bank of England can hold their nerve and this is the peak, which will be a welcome boon for investors, developers and lenders. Now we need some further visibility on potential interest rate cuts, which should act as a catalyst for a rapid bounceback in real estate activity levels.”

Clare Beardmore, Director of Legal & General Mortgage Club, comments: “The Bank of England’s decision today to put off a further rate rise will provide some relief for homebuyers and those who need to remortgage. Inflation dropped to 6.7% in August, and the Bank clearly believes that existing interest rate rises are already having a positive impact. 

“Over the past week, we have already seen reductions in interest rates on some mortgages. However, pricing remains higher than before, so it comes as no surprise that a growing number of buyers, particularly first-time buyers, are looking to the Bank of Family for support. In fact, our latest research shows that this year family and friends will be involved in a record-breaking 318,000 property transactions. Perhaps worryingly, nearly three-quarters of those who step up to provide a financial gift are not seeking professional advice.

“In the challenging economic environment we face today, it is all the more important that buyers and those supporting them seek advice. Advisers will be able to guide aspiring home buyers, and the Bank of Family, to ensure they are making the best decisions for their circumstances.”

Nick Green, Mortgage Broker at Alternative Estates said: “Finally some common sense on interest rates. The BOE keeping the rates at 5.25% is good news for borrowers and tenants. The recent hikes have not only been painful for mortgage borrowers but have impacted tenants as landlords with mortgages have seen steep increases as many of them were on historically low trackers rates, so these increases have then passed onto to the tenants in rent hikes over recent months to try and recoup the higher costs.

“Also, BTL investors have been cautious about new purchases and rather than buy, they have been selling some of their portfolio to reduce the exposure to the higher rates. All this is putting extreme pressure on the letting market with a lack of stock which is turn is keeping the house buying market relatively stable, slow but stable.  This hopefully will provide some certainty with the caveat “ no room for complacency” meaning watch this space if inflation doesn’t come down. 

“What needs to be focused on by the government is the rental supply and demand as we are heading for rental housing crisis due to such low stock levels with people struggling to find suitable homes to live in which in turn restricts movement and jobs therefore the local economy.”

Amanda De Courcy, Director at ADC Financial Limited said: “Surprisingly, no interest hike today! The BoE has left the rate at 5.25%. This feels like the peak now, as inflation has seemingly turned a corner, with August price rises slowing down.

“This is an encouraging move for SME’s and mortgage owners, all who are feeling the squeeze of the cost of borrowing.

“SMEs generally borrow on variable rates for working capital purposes; they will undoubtedly be relieved to see what I think can be perceived as a turning point in our economic picture. Lending remains cautious and high levels of interest, coupled with the ‘acid test’ used for proving serviceability, have made for a difficult environment in which to grow and thrive. Hopefully this good news will start to filter through the economy over the coming months and give us all some much needed optimism for further growth and prosperity.”

Richard Dana, CEO at Tembo Money said: “The base rate had been widely predicted to rise today. But after a seemingly endless run of interest rate rises, the Bank of England voted to hold the base rate at 5.25%. This is largely attributed to the fact that the markets were surprised by Wednesday’s inflation announcement.

“Increasing fuel costs had led economists, and even politicians to warn that inflation would rise in August. But the falling cost of food meant that inflation softened, in turn placing pressure on the Bank of England to press pause on rate rises. What does this mean for mortgages?

“Well, we have already seen some big lenders reducing their interest rates over the past week, even before this news. Deals below 5% are now back in the picture, and some rates have fallen recently by as much as 0.46%. Obviously it’s still a tricky market for those that are soon to expire from sub-3% mortgage rates, but this week’s news has certainly been a step in the right direction.”

Lewis Prager, Managing Director at Leeds Money said: “It is very refreshing to hear that the BOE has chosen to hold rates today. This will give a great relief to many households in the UK, especially those on variable & tracker rates. I do believe landlords too who are struggling to remortgage like for like balances at the current much higher stress testing rates will also be feeling a slight sigh of relief too at todays announcement.

“However, it must be noted that we can not become complacent with bringing inflation under control & not be thinking that rate rises are completely over. Today marks the first “hold” of rates since 2021 which can only be seen as a positive for our constantly changing mortgage sector & only strengths the needs for our experienced expert Mortgage Brokers.”

Tony Hall, Head of Business Development, Saffron for Intermediaries comments: “Assuming that the mortgage market and wider economy aren’t subject to any more nasty surprises, we might expect interest rates to stay at a similar level for the foreseeable future. We know that markets thrive on certainty, and while this has been notably absent in our sector in the past three years, I am hopeful that the final quarter of the year will be characterised by more stability.

“We are seeing inflation fall marginally and if the rate continues to trend in this direction, we could see slight reductions to interest rates over time. The larger lenders may also start to compete on the pricing of fixed rate deals to ensure they finish the year with a flourish. 

“Predictions aside, borrowers will need to adjust to this new higher rate environment, and advisers are tasked with helping them with this crucial transition. We are firmly within a ‘new normal’ and should not expect a return to rates in the region of 2% any time soon. The role of the adviser in anticipating, educating, and mitigating the risk of payment shock is huge here, particularly for those customers who might have locked into a sub-1% deal as little as two years ago. While the outlook does provide hope, there is no doubt about the challenges that our market currently faces.”

John Phillips, CEO of Spicerhaart and Just Mortgages said: “Like many, my expectation was that the Bank of England would follow the European Central Bank and go for one more increase. However, I’m delighted to be proven wrong and see the MPC hold rates instead. This will certainly be a positive for mortgage holders, borrowers and the general public who have been demoralised by fourteen straight interest rate rises. 

“While yesterday’s good news on inflation certainly made the pause more palatable for the MPC, there’s no question high household costs – particularly fuel, food and energy, still present a challenge. As a result, affordability will remain a clear obstacle for both borrowers and brokers. 

“Brokers will continue to play a critical role by using all the tools available to help clients make the numbers work, whether that’s the many households still set to remortgage or those that need to move. Lenders have played their part in recent weeks to reduce rates considerably and news of stability in interest rates may allow lenders to loosen the purse strings a little further.”

Benjamin Robins said: “On the one hand, I understand the Bank’s caution. The UK economy is already facing a number of challenges, and higher interest rates could further damage economic growth. Additionally, the Bank is aware that higher interest rates will make it more expensive for people to borrow money, which could put additional pressure on household budgets.

“On the other hand, it’s important to remember that the overall goal is to bring inflation down, something that hits the pockets of UK households everyday. The Bank has a mandate to keep inflation at 2%, and it needs to take action to bring inflation down.

“Overall, I believe that the Bank of England has made the right decision in keeping the base rate at 5.25%. There are clear risks on both sides, and the Bank is trying to strike a balance between bringing down inflation and avoiding a recession.

“The implications for my clients with the Bank of England’s decision to keep interest rates on hold will have different implications for different clients. For example, clients who are on variable rate mortgages will see their monthly payments remain unchanged, potentially for the first time in months. For clients that are looking at buying or remortgaging, they could start to see rate reductions on products available on the market which, even if they have secured a mortgage, as long as they haven’t completed they can take advantage of it.

“I am advising my clients to carefully consider their individual circumstances before making any decisions about their mortgages. If you are unsure whether you should fix your mortgage rate or go on a variable rate, speak to a professional who can help you make those decisions!”

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