"Hopefully a period of strong competition will show up in competitive mortgage pricing in the weeks and months ahead"
The decision was widely anticipated and the US Federal Reserve voted to hold their own rate yesterday.
The decision was not unanimous: 3 members voted to increase the rate by 0.25% citing 'evidence of more persistent inflationary pressures', while the remaining 6 voted to hold the rate at its current 5.25%.
UK GDP is expected to have been flat in 2023 Q3, weaker than projected in August. GDP is expected to grow by 0.1% in Q4, also weaker than projected previously.
Industry reacts:
Steve Seal, CEO, Bluestone Mortgages, comments: “Today’s decision to hold interest rates is welcome news for borrowers across the country. Though rates have somewhat stalled, they are still at a historic high and it looks unlikely that there will be any cuts on the near horizon. Without a doubt, affordability will remain the key challenge for would-be and existing borrowers across the country.
“For those worried about how they can take their first or next steps onto or up the property ladder amid the current environment, rest assured that there is still help at hand. Mortgage brokers have a vital role to play in signposting customers to the best available options to suit their unique circumstances and help make their homeownership dreams a reality.”
Paul Glynn, CEO, Air, said: “After fourteen consecutive increases in the base rate, last month’s decision was a strong indication that the market was finally settling into a steadier groove. The decision today continues the trend, confirming earlier predictions by economists that inflation would drop to a more manageable level before the end of 2023.
“It is still essential that aspiring first-time buyers and existing homeowners lean on professional advice during this challenging time. An adviser can draw upon years of experience to help customers secure a deal that is tailored to their circumstances. This is especially true for the over-55s, who may be feeling the impact of inflation as it erodes fixed incomes and pension pots.”
Tony Hall, Head of Business Development, Saffron for Intermediaries, said: “Today’s decision to maintain the base rate is another positive sign that the mortgage market is weathering the broader economic storm. This is especially poignant following the decision to stabilise rates in September, suggesting that we may enter the new year with a much more positive outlook than many expected at the beginning of 2023.
“Despite these signs of positivity, borrowers should still seek advice in order to navigate this complex market. Many customers will still be facing challenging financial situations, and the threat of payment shocks remains significant as they adapt to the new interest rate environment. Financial advisors can assist clients as they sail through these final choppy waters towards shore, helping customers find the best options available to them and ensuring they can fulfil their homeowning dreams.”
John Phillips, CEO of Spicerhaart and Just Mortgages said: “It is encouraging to see the Bank of England continue to hold interests rates, as the markets and the majority of economists expected.
"In reality, it feels like the only logical move as it’s still too soon for any reduction and an increase would just lump further misery and uncertainty on borrowers – especially as the Bank of England itself still doesn’t yet know the full extent or impact of its 14 previous rises.
“While inflation stagnated in September, the general consensus is it will continue its downward trend. In the mortgage market, today’s news will hopefully offer some stability and give lenders the confidence to take a further look at their books and continue to price more competitively.
"Even so, affordability remains a key blocker preventing many from pushing ahead with plans. With the expectation that rates will stay higher for longer, brokers must throw their arms around clients and educate them about the tools available to help make the numbers work and support borrowers of all backgrounds.
“With homeownership still a clear aspiration and a top priority for all the major political parties, it will be interesting to see what will be announced to encourage this important part of the economy as the election campaign gathers pace over the next 12 months. Increasing routes to homeownership, particularly for struggling first-time buyers is absolutely critical in the current climate.”
Paresh Raja, CEO of Market Financial Solutions, said:
"With the Bank of England holding the base rate and house prices growing unexpectedly yesterday, there's room for positivity to return to the property and lending markets. Following a challenging 18 months, these reasons for optimism should translate into more favourable products and rates for property buyers in the coming weeks and months."
“Nevertheless, lenders cannot take their foot off the break when it comes to supporting brokers and borrowers who will still be feeling the harsh effects of the new higher rates environment. To help the market return to a more buoyant state, therefore, lenders must recommit to taking a proactive approach to lending - providing clarity and certainty to borrowers wherever possible, allowing them to enter the property market with confidence."
Rob Clifford, chief executive of mortgage and protection network, Stonebridge, said:
“The mood music prior to this announcement appeared to point to the MPC holding Bank Base Rate due to a number of factors, not least a fall in UK food inflation announced earlier this week and, I suspect, a growing sentiment that businesses and consumers could not tolerate much more in terms of further rate hikes. So, it’s not surprising to see today’s decision, however, we must be mindful that holding BBR does not mean a cut in bank base rate will follow anytime soon.
"A common view is that this could stay at today’s level until the early part of 2025, even if – as anticipated – inflation does fall further. We are all in a new higher rate environment that we need to get used to – particularly mortgage borrowers who are coming to the end of deals, as they will be facing a material shift in costs at a time when, for many, affordability is squeezed in general. Impartial advice about what to do is even more critical.
"Mortgage product rates have continued to inch down in recent weeks, which is clearly good news, and this is a trend that could continue even without a fall in BBR. Lenders need to lend and hopefully, a period of strong competition will show up in competitive mortgage pricing in the weeks and months ahead.”
