One member preferred to increase the bank rate by 0.5 percentage points to 2.75%, while the other preferred to up it by 0.25 percentage points to 2.5%.

The MPC judged that if the economy evolves in line with the latest Monetary Policy Report projections, further increases in bank rate may be required.

However, the committee also stated that “it will respond forcefully, as necessary” to persistent inflationary pressures.

Industry experts react to Bank of England interest rate increase

This page will be updated throughout the day with comments from industry experts — stay tuned to find out their reactions!

3:48pm

Hannah Bashford, director at Model Financial Solutions:

"The Bank of England base rate decision on Thursday will not have a huge impact on rates as lenders had already priced in this increase over the course of the past month or so. In fact, many had forecast a hike that was higher than the one we saw on Thursday. Tracker mortgage rates will, of course, increase after this latest rate hike but they remain very competitive in comparison to fixed rates.

"What will worry many people is the Bank of England's downbeat assessment of the economy. Its prognosis for the economy is bleak in the extreme. That, coupled with rising mortgage rates, is likely to dampen demand for property as people batten down the hatches and wait to see how things pan out.

"A lot will depend on how the jobs market holds up in 2023."

3:18pm

Moubin Faizullah Khan, CEO at GetGround:

"While the most recent Bank base rate hike feels seismic and historic, the relative immediate impact on landlords, investors and homebuyers seeking new mortgages is going to be less dramatic.

"The market turmoil that followed September's mini-budget caused swap rates to increase more than needed. This means that today's extraordinary rate rise is already priced into many lenders' credit risk plans. Logically therefore we should expect fixed rate mortgages - the bread and butter of the buy-to-let sector - to stay priced where they are for now.

"If predictions for what will go into Jeremy Hunt's November Budget are accurate, we can reasonably predict that swap rates will fall over the rest of Q4, bringing down with them the price of fixed rate mortgages that lenders feel comfortable to offer in the first few weeks of the new year."

3:15pm

Jonathan Samuels, CEO at Octane Capital:

“While the mortgage market has settled in recent weeks, today’s latest base rate hike will certainly sow more seeds of panic amongst the nation’s homebuyers and who can blame them after witnessing the largest single increase since 1989.

"The average homebuyer opting for a variable rate mortgage can expect to see the cost of their monthly repayment increase by around £166 per month as a result of today’s increase.

Those currently coming to the end of a three year fixed mortgage will also see an increase as they look to secure another fixed term, with their monthly repayment increasing by an estimated £257 per month, despite having cleared a substantial chunk from their original loan.”

3:05pm

Asim Shirwani, CCO at Lendhub:

"Today’s base rate surge will not have come as a surprise to anyone; a 0.75% increase was widely expected by the markets and factored into most forecasts. Whilst this rate hike will feel deep and painful right now, and the headlines will say this is the single biggest increase in three decades, the overarching feeling is one of temporary relief that it wasn’t higher.

"Credit analysts up and down the country now have the unenviable task of forecasting where base rates will peak next year and tailor mortgage and other borrowing products accordingly.

"Personally, I feel inflation will start to ease off in spring next year and both the cost of borrowing and cost of living will stabilise from the second quarter in 2023."

2:51pm
Richard Jones, CEO at Pilot Fish Finance:

“Today’s hike in rates was fully anticipated. Our clients will be focusing their minds on the medium to long term implications; where will the interest rate peak and settle? But maybe more importantly for business confidence and debt transactions, how long and big will the forecast recession be, will house prices fall and time to sell increase?

"These factors will all impact development appraisals and the loan to value available. We can be certain that the next 2 years will be another challenging time and brokers will need to provide more advice than normal.

"Potentially we may find deals are even harder to place and take longer to execute!”
 

2:37pm

Paul Holland, mortgage broker at Henchuch Lane Financial Services:

"Fixed rates have already factored in this increase, so they shouldn't move any further north; they tend to be based on swap rates, which if anything, we are now seeing coming down, as some confidence is restored to the market following the U-turn on everything Kwarteng and Truss did.

"Tracker and variable rates will, of course, go up as a result of the rate rise, but there is such a huge gap between the bank rate and fixed rates that we shouldn't see any further hikes in the short-term.

"Anyone exiting their mortgage now and in the foreseeable will be having a shock in comparison to the rates they're used to and we're currently dealing with clients whose mortgages are going up by £500-£1000 per month.

"This is making the energy crisis seem like a drop in the ocean and there will be a lot of people defaulting on their mortgages or selling their houses in the medium term. Savers on the other hand should of course start to benefit from this."

2:30pm

Austyn Johnson, founder at Mortgages for Actors:

"Although the base rate is still not that high when compared to 15-20 years ago, such a sharp and sudden hike for those who have been fixed very low for very long will leave them reeling at the change.

"Borrowers on the whole will be affected, but worst hit will be the people whose fixed rate ends in the next few months, as some people could see their monthly payment double.

"People on variable rates, especially portfolio landlords, will need to get the ball rolling as soon as possible, as they will have increasing costs across their whole portfolio.

"Even the people in the middle of a long fix will now be limited in their flexibility — if they suddenly needed to get out of it, they will be hit with a huge hike in rate.

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"Movers will be wary of moving, buyers will be wary of buying and rents will rise to make up for this. Property prices will need to come down to cope with the change if we want to keep this market moving smoothly. With things as they are, people need to talk to their broker to ensure they get the best possible deal."

2:08pm

Stuart Law, CEO at Assetz Group: 

“We have been talking about the end of the BTL era for some time, but today’s interest rate rise really does signal its final death knell, both as a viable sector for investors, or as a model that makes a useful contribution to our national housing mix. 

“Even the most committed landlords will now be wondering how they will be able to fund their investments, as BTL mortgage costs soar on top of recent tax rises aimed at landlords.

"Other options do exist for keen property investors, which work much better in the context of the current market conditions and policy environment — for example, investing in a portfolio of loans to housing developers means investors can receive typically 6-9% gross yields as monthly loan interest, rather than pay a higher interest rate to a bank than the rental income for a BTL mortgage. Plus, this investment has significant social impact, allowing more homes to be built for sale and rent at a time when we are facing a deepening national housing crisis.

“We must build more homes, it is the only way to tackle affordability and undersupply in the rental and for sale markets.

"Finding new ways for private investors to successfully inject capital into the market is vital at a time when we look set for massive cuts in public spending, but we can’t ignore the other crucial aspect of this, which is supply side reform — that means unrooting the planning system to promote more development.

"However, once again, whether this can be delivered by government is in doubt as we all await the Autumn Statement on 17th November."

1:52pm

Alastair Hoyne, CEO at Finanze:

"Ongoing rate rises are inevitable while the inflation target remains unmet; unfortunately, those with debt (the vast majority of the population) will face higher repayment rates whether immediately — with tracker mortgages, credit cards or others — or eventually as fixed rates end and borrowers have to refinance.

"With a country chained to debt where cutting back often isn't an option, it will actually result in wide-spread suffering.

"If rates continue to rise, lenders will have no choice but to trim their margins to keep lending rates competitive, especially those without deposits to fall back on.

"However, there is a silver lining — property investors that have built a war-chest ready for the anticipated property price drops will be well suited to take advantage of those forced to ‘fire-sale’ and the auction markets, which are expected to swell."

1:45pm

Hugo Davies, chief capital officer at LendInvest:

"As we emerge from a liability-driven investment crisis triggered by the mini-Budget, we find ourselves in the throes of a credibility crisis between fiscal and monetary policy.

“The MPC was backed into a corner today, with little option but to give markets what they were demanding in the form of a 75 basis points rate hike.

“We shouldn't see any abnormal activity in property or mortgage markets off the back of this decision, gilts look stable, peak base rate continues its recent downward path, but sterling is currently going through a choppy ride."

1:39pm

Paul McGerrigan, CEO at Loan.co.uk:

"Another interest rate increase was inevitable as the MPC uses its limited range of tools to try to balance the books.

“Given that inflation is at a 40-year high, at least in the short-term action needed to be taken.

“This is going to impact homeowners with tracker mortgages, standard variable rates (SVRs), and those coming off fixed rates now and across the coming months. As we enter winter, was the timing right for this move?

“These are tough calls; it could be a challenging couple of quarters, but UK PLCs have proven to be robust and resilient in the past and will no doubt prove to be again.

“On paper, and based on recent events, the new prime minister and his team have more experience and depth in economics and fiscal policy — whether you agree with their politics or not — so let’s see what they come up with later this month.

“Borrowers have big decisions to make, and they need help, so the role of the mortgage broker and IFA has never been more important or needed.”

1:25pm

Andrew Aldridge, partner at Deepbridge Capital:

“Quelling rampant inflation and kickstarting a slowing economy left the bank facing a difficult balancing act, with today’s interest rate hike to 3% hardly surprising in this context.

“Fiscal and monetary policy remains murky as we move towards this year’s close, and this environment poses significant challenges for investors and financial advisers in the public markets.

“Turning to private markets and venture capital as an alternative investment can offer steady long-term growth opportunities, with unparalleled tax reliefs available via the Enterprise Investment Scheme.”

12:56pm
Tomer Aboody, director at MT Finance:

“Rising inflation, coupled with the disastrous mini-Budget, mean this rate rise was always on the cards. Borrowers need to come to terms with the new norm, which is higher interest rates — the rock-bottom rates of the past are long gone.

“As rates rise and the cost of living increases, the negative impact on the housing market is inevitable.

“Given the importance of the housing market to the wider economy, the government needs to provide some form of assistance to stimulate the market. This could take the form of a restructure of stamp duty or some form of mortgage interest tax relief to alleviate some of the many stresses that borrowers will face in coming months.”

Stavros Theophilou, director in real estate finance at Lawrence Stephens: 

“We know that many of our lender’s funding lines have been in place for some time, and are likely to be fixed to previous rates set by the Bank of England. Despite the base rate going up this afternoon, there could be a delay in the increased cost of borrowing, for now.

“However, it will eventually affect lenders when existing and new funding lines are adjusted to take into account the new base rate. It is therefore imperative to strategise and plan in advance for the impact this will have.

“Now more than ever, lenders need to be even more competitive in terms of speed and products to attract borrowers — particularly in the specialist finance market, where speed has traditionally always been of the essence.”

David Reed, operations director at Antony Roberts:

“First-time buyers in particular will be conscious of the impact a further rate rise on their mortgage payments. They may pause while they weigh up the feasibility of plans to buy before Christmas, or they may even hold off until the spring or Q2 and reassess the situation then.

“A preference to continue renting instead of buying will further restrict the supply of rental accommodation coming to market at a time when availability is already acute in many areas.

“The situation is very different for those buyers with a formal mortgage offer. For them, there is a rush to complete on a purchase before the bagged relatively attractive rate expires."