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  • Writer's pictureMortgage Tree

Bank of England maintains interest rate at 16-year high

In a widely anticipated move, the Bank of England has maintained the interest rate at 5.25%, marking the sixth consecutive hold at this 16-year high.

The Monetary Policy Committee voted 7-2 in favour of the hold.

This decision comes as inflation continues to hover above the Bank’s 2% target at 3.2%, despite recent declines. The steady rates reflect ongoing concerns about economic stability and the delicate balance required to manage inflation without stifling growth.

The Bank’s latest monetary policy decision was accompanied by forecasts predicting a slow but steady adjustment in the economy. While inflation has decreased slightly, it remains a significant concern that justifies the current rate, according to Bank officials.

The decision aligns with predictions from most economists and market analysts who had anticipated the hold due to the prevailing economic conditions. This morning markets had the chance of a cut pegged at 5%.

Yesterday brokers called on the Bank of England to “release its chokehold on the base rate” while earlier this morning the IEA’s shadow MPC said it would cut rates by at least 0.5%.


Nicholas Mendes, mortgage technical manager at John Charchol:

“Since the beginning of the year, the Bank of England has taken a more conservative stance than the markets initially anticipated. Originally, projections suggested a total of 150 basis points in rate cuts throughout the year. However, expectations have been significantly adjusted, with predictions now set for a cumulative reduction of only 50 basis points by December. 

“The likelihood of a rate cut in June remains high, but this could be followed by an additional cut in either September or November. Nevertheless, if inflation and wage growth continue to exceed forecasts, the timing of these adjustments could be pushed back, potentially delaying the first rate cut until August.”

Ben Nichols, interim managing director at RAW Capital Partners: 

“Cuts are coming, perhaps sooner than some might anticipate, but until there is certainty that inflation is not going to rise again the Bank of England will remain steadfast in holding the base rate where it is.

“That the base rate has remained static for nine months has afforded homebuyers and investors a degree of certainty. But higher borrowing costs will continue to squeeze house prices, and this will naturally weigh on the minds of both buyers and sellers. Moreover, it places the emphasis on how lenders and brokers can best support borrowers in this higher-rate environment.

“Flexible financial products, firm commitments, and transparent communication are all vital qualities that brokers and their clients need when looking to leverage opportunities as the economic horizon brightens. For lenders, therefore, meeting these commitments will help foster confidence among investors in the UK property market.”

Paresh Raja, CEO of Market Financial Solutions: 

“We’ve known for some time that the Bank of England would not be cutting rates today. For the past two months or so, the question has been whether the first cut will come in June or August, and then how many cuts will there be by the end of 2024.

“When the base rate falls, and how quickly, remains to be seen. But the bigger picture is that the property market has slowly but surely gone through a period of adjustment over the past two months – the reality has sunk in that rates will not get back to the low levels many borrowers had become accustomed to throughout the 2010s.

“A base rate above 4% is highly likely for the next 12 to 18 months, and the sense of inertia is steadily fading away as buyers and investors decide to re-enter the market. So, now is the time for lenders to be flexible and embrace a ‘can-do’ attitude, ensuring the right products are available to brokers and their clients in a timely manner, allowing fresh life to be breathed into the market.”

Jonathan Bone, mortgage lead at

The base rate hasn’t budged since last August, causing headaches for homeowners looking to remortgage and locking out first-time buyers struggling with sky-high prices. Inflation has dragged its feet coming down, which has pushed up fixed mortgage rates once more.

But there’s a glimmer of hope on the horizon: the market is buzzing with predictions of a potential interest rate cut sometime between June and August. Yet, without a crystal ball, it’s impossible to say for certain whether this will materialise.

“If you’re due to remortgage very soon, it’s worth knowing that some lenders will charge you for sending someone out to value your property. If you then find a different lender offering better rates after a potential Bank of England rate cut, you won’t get a refund for that original valuation, leaving you out of pocket. So, if you’re playing the waiting game to see what interest rates are doing over the next few months, be aware that not all lenders will charge you a valuation fee so speak to a mortgage broker who can point you in the direction of the lenders who offer a free valuation.”

Ryan Davies, strategy director at Bluestone Mortgages: 

“Today’s decision will no doubt be a blow for would-be and existing borrowers who were hoping to see interest rates come down and mortgage payments to ease. Rates remain at their highest level for 15 years, putting sustained pressure on household finances and leaving many feeling squeezed. 

“For those concerned about how ongoing affordability challenges will impact their homeownership ambitions, remember that there is always help at hand. Whether that be getting in touch with their mortgage lender, or speaking with a broker to understand the different options available, it’s our duty as an industry to help these customers step onto or up the property ladder.”

Tony Hall, head of business development at Saffron for Intermediaries:

“Although the base rate has been held today, it’s been really positive to see the conversation shift from if it will fall to when. The outlook for the mortgage market remains positive, with mortgage approvals rising for the sixth month in a row in March and the number of homes for sale in Q1 also rising by 9% year-on-year. Average rates have fallen from their summer 2023 peak and lenders are continuing to compete on price to attract buyers. The mortgage market is clearly on a stronger footing and we’re confident that over the coming months, we’ll see more activity as our sector goes from strength to strength.” 

Andrew Gething, managing director of MorganAsh: 

“Even the biggest advocates for a cut to base rate would be unsurprised by today’s news, given the central bank’s continued emphasis on keeping rates higher for longer. News from their counterparts across the pond and on the continent will have only confirmed that view. 

“While stability is of course no bad thing – especially for those on variable or tracker rates – it does mean that the prolonged financial pressures facing many borrowers will only continue. This is significant given the huge emphasis that has been placed on vulnerability by the likes of Consumer Duty, pushing firms to be alive to the challenges facing those clients in difficulty. As those pressures continue, it’s never been so important to know who your vulnerable customers are and what outcomes they are receiving. 

“Consumer vulnerability continues to rise up the agenda, with the FCA’s ongoing review of how firms approach vulnerability, or our very own chair discussing vulnerable policies and practices on BBC Breakfast or Good Morning Britain. Whether it’s the public sector or regulated sectors, the scrutiny is real and expectations are high. That’s certainly true as pressures persist and a potential cut to base rate continues to look further away.”

Nick Leeming, chairman of Jackson-Stops: 

“The Bank of England has taken a ‘no news is good news’ approach to today’s decision, opting to hold firm for another six weeks. While no change was widely assumed, the expectation is that June’s meeting will finally break the base rate deadlock and initiate a rate cut. 

“The Bank of England’s hawkish approach may not be headline grabbing, but at least it isn’t a distraction for buyers or sellers who want to press on with their sales and searches. While everyone in need of a mortgage would prefer rates to fall significantly, interest rates of around 5% are not high by historic standards. 

“It’s important to keep in mind that, while the past 18 months have been a time of economic headwinds, the exceedingly low rates that became the norm in the 2010s were the exception and not the rule. 

“A pivot towards lower rates in June, even if only minor, would help to ease affordability constraints at the lower end of the housing market and help to ensure chains don’t break down once sales have been agreed. 

“For now, today’s ‘hold’ should help to maintain the fragile momentum we’ve seen building in the housing market recently. Across the Jackson-Stops network in April we have seen a year-on-year uptick in viewings, new instructions and new buyer enquiries, which bodes well for a busier second half of the year.”

Nathan Emerson, CEO of Propertymark:

“As interest rates continue to remain the same in order to combat levels of inflation this country has not witnessed for decades, Propertymark is optimistic that buyers will continue to adapt to these new market conditions. Our own Housing Insight Report discovered that there has been a 4% increase in the number of potential buyers registered, and an 8% increase in the number of available properties to rent, which shows that there are some reasons to remain optimistic that the housing market is recovering from shock economic factors from the last three years.” 

Article by Ryan Fowler from The Intermediary Online


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