Industry reacts as Bank of England holds base rate at 4.5 percent

The Bank of England held interest rates at 4.5% and warned against assumptions that they would be cut over its next few meetings. The Monetary Policy Committee overwhelmingly voted 8-1 to keep rates on hold with only external member voting for a quarter-point cut.

Mortgage industry reacts:

Alpa Bhakta, CEO of Butterfield Mortgages Limited, said: “While property investors were hoping for a rate cut, the economic climate and property investment outlook are in a much better position than in previous years. It’s important to remember, the upcoming Spring Budget and new tax year could influence market conditions and introduce some uncertainty. As such, it’s essential for lenders to stay proactive, supporting borrowers and brokers, to ensure the market can capitalise on its strong start to the year.”

Paul Noble, CEO of Chetwood Bank, said, “This decision was unlikely to surprise, with inflation still proving hard to rein in and the central bank remaining cautious about the road ahead. While many had hoped for a consecutive cut, today’s announcement reinforces the view that rate reductions will be a gradual process throughout the next year or so rather than an immediate shift.

“With the Chancellor’s Spring Statement on the horizon and inflation still unpredictable, the economic outlook remains uncertain. A stabilised base rate means no immediate relief, but for savers, it extends the window to secure competitive rates before any future cuts materialise. Acting now to lock in strong returns could make a meaningful difference in the months ahead.

Paresh Raja, CEO of Market Financial Solutions, said: “The past six months have shown that predicting base rate movements is never straightforward. The hope had long been that once inflation was brought under control, the Bank of England would rapidly reduce rates. But this was over simplistic; it overlooked the myriad other factors at play – economic and politically, domestically and internationally, the landscape is constantly evolving, and while further cuts to the base rate are still expected this year, it is likely that the central bank will remain cautious. Today’s decision reflects that.

“Where the property and mortgage markets are concerned, it is important that neither complacency nor inertia are allowed to set in. Sitting tight in the assumption that rates will tumble could prove risky. With data showing that house prices and buyer demand are on the rise, the market will clearly move ahead. So, the focus from lenders when serving brokers and borrowers has to be on delivering products and services that give clients the confidence to act in the here and now, with flexibility and optionality remaining key qualities in achieving this.”

Darrell Walker, Group Sales Director at ModaMortgages, said: “The market widely expected a hold today, and with analysts forecasting at least a 0.5% reduction in the base rate by the end of 2025, this decision is unlikely to slow activity.

“Indeed, while borrowing costs remain a challenge for some, landlords haven’t stopped investing. Instead, they are being pragmatic; they have recalibrated, adjusting both their budgets and the types of assets they are targeting. We expect this trend to continue following today’s news, and we have seen many landlords using the current period of stability to diversify their portfolios, with HMOs and MUFBs proving particularly popular.

“As ever, speculation is rife as we head into next week’s Spring Statement and, beyond that, the start of a new tax year. With this in mind, rather than focusing on when the next cut might come, lenders should prioritise agility, ensuring brokers and their clients have both the products and support they need to get deals over the line.”

Via @PropertyWire