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Bank of England base rate hike will “put a further squeeze on the already overheated UK rental market” – reaction from Mortgage and Property Experts

by | Mar 23, 2023

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Following today’s news that the Bank of England has hiked rates yet again, with a 0.25% rise to 4.25% – the highest level since 2008 – there are clearly big implications for the mortgage and property markets.

Commenting on this latest Bank of England base rate hike, mortgage and property experts have been sharing their reactions with IFA Magazine as follows:

Jonathan Gordon, director of IP Global: “This increase in the base rate, while expected, is likely to put a further squeeze on the already overheated UK rental market. The shortage of affordable housing stock is widely documented. However, it looks like savers who are waiting for a fall in borrowing rates before they purchase are likely to defer their decision for longer. In the short term, this is likely to add further pressure to rents as the supply / demand imbalance continues. Landlords are also likely to increase rents to mitigate the impact of higher borrowing costs. It’s a blow for tenants as much as it is for many borrowers.”

Luke Thompson of King’s Lynn-based PAB Wealth Management: “The Bank of England really had no choice but to raise the base rate with the recent news that inflation was still on the rise. To me, the prediction that inflation will be at 2.9% by the end of the year looks fanciful at best and if they can’t get this under control soon, more base rate rises could be on the way. In terms of interest rates being charged by lenders, swap rates have been on the rise again in recent days so we may start to see lenders increasing their rates soon even though rates have been falling for the past seven to ten days. Personally, I will be interested to see if lenders are as quick to pass on increases to their savings rates to customers as they are to pass on the increases to the Standard Variable Rate that they charge mortgage customers.”


Iain Swatton, Head of Mortgages, Dashly, comments on today’s interest rate rise but says borrowers shouldn’t feel the impact:

“Here we go again. It’s not a great surprise that interest rates have increased again but we have to look at the bigger picture here. Lenders have been factoring another possible increase into their pricing for a few months now. So, while the news doesn’t necessarily fill potential new buyers with confidence, we believe that borrowing rates are now likely to remain where they are which should hopefully provide comfort to some.

“Lenders need to lend. With less buyers in the market, lenders need to set rates at a point that will still entice customers in. We know that the interest is there as estate agents are reporting an increase in registrations. What’s happening is that with uncertainty around whether now is the right time to buy, it might take a bit longer to sell.”


Adam Smith, Founder at Northampton-based Alfa Mortgages: “As long as inflation remains high, interest rates will continue to rise until the Monetary Policy Committee is confident they are on track to hit their inflation target. It’s simply monetary policy in action and we shouldn’t be surprised by this latest decision. The good news is, it feels like lenders have already priced their fixed rates taking potential future base rate rises into account.”

John Philips, Operations Director at Just Mortgages commented, “This latest 0.25% rise may feel like a step in the wrong direction for the mortgage market but it’s widely accepted to be a necessary step in the battle to curb inflation. Although the base rate has gone up we have seen mortgage prices falling in recent months and customer enquires to our brokers across the country have been remarkably robust since the start of the year. The advantage of yet another rate rise is that nobody should be caught off-guard and I think that brokers are doing a tremendous job in managing the expectations of clients and finding them the right deal.”

Amit Patel, adviser at Welling-based mortgage broker, Trinity Finance: “The MPC has voted once again to increase the base rate to 4.25% on the back of inflation creeping up last month. This is a slap in the face for hard-working families up and down the country. This will pile further pressure on households and small to medium-sized businesses, which I think is a huge mistake.”


Rhys Schofield, managing director at Derbyshire-based mortgage advisers, Peak Mortgages and Protection“It was pretty obvious when inflation took a surprise jump upwards in February that the Bank of England’s hands were tied and they’d have to push on with another rate rise. Who’d have thought salad costs would be dictating millions of people’s mortgage rates?”


Adrian Anderson, Director of property finance specialists, Anderson Harris said:

Mortgage holders hoping that the Bank of England would pause the interest rate rises were dealt a blow yesterday by the surprise leap in inflation to 10.4% in February 2023.

Today’s rate rise to 4.25% is consistent with the Bank of England’s plan to battle inflation but it means no gain, just more pain for mortgage holders who are already squeezed.


This will be particularly challenging for homeowners who have chosen to take a variable rate mortgage in the short-term, in the hope that inflation reduces and they can select a lower longer term fixed rate than what is available now.”

Rob Clifford, Chief Executive of mortgage and protection network, Stonebridge: “Once it was revealed this week that inflation had risen to 10.4% in February, followed by the Fed’s decision to raise rates yesterday in the US, it seemed like a racing certainty the MPC would have to act today with a further Bank Base Rate rise. The markets have already been reacting to that news with swap rates increasing, and by this morning that rate rise already seemed priced in. Clearly those borrowers on tracker rates will feel this rise immediately, however some lenders have been reducing fixed-rates this week, and my feeling is that the search for business – particularly from the mainstream, high-street lenders – will continue to keep mortgage rates round about where they are. This makes it even more attractive and indeed necessary for consumers to seek expert mortgage advice and mortgage advisers come into their own when lending criteria and product pricing are more complicated than usual. As we know, the Bank of England has few levers it can pull in terms of trying to bring inflation down, and the stubborn nature of inflation evidenced by this week’s figures, meant this was a decision it probably felt it had no option to make. We already seem like a long way from last week’s OBR forecast for inflation to be 2.9% by the end of the year, and we will need to see some sharp falls in inflation in the months ahead, before there is any thought of Bank Base Rate being cut.”

Head of Corporate Partnerships at Sirius Property Finance, Kimberley Gates, commented: 


An eleventh consecutive interest rate hike will come as a blow to the nation’s homebuyers who will now see the cost of securing a mortgage climb that little bit higher at a time when they are already struggling with the wider cost of living. 

The silver lining is that today’s increase is the lowest since August of last year which suggests we could be over the hump. However, we expect that interest rates will continue to rise before they fall, with the general consensus being that they will peak at five percent.” 

Co-founder and CEO of Wayhome, Nigel Purves, commented:


We’ve already seen how increasing interest rates have brought uncertainty to the mortgage sector and it’s the nation’s first-time buyers who have been hit hardest in this respect. 

Not only are they facing the tough task of accumulating a deposit on the ever increasing cost of a home, but the number of higher loan to value products has also reduced, while the monthly cost of repaying a mortgage has climbed. 

It’s a bleak outlook, to say the least, and one that will be all the bleaker following today’s decision.”


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