Two members preferred to maintain the bank rate at 3.5%. 

The MPC said it will continue to closely monitor indications of persistent inflationary pressures, including the tightness of labour market conditions at the behaviour of wage growth and services inflation. 

If the economic outlook presents more persistent inflationary pressures, the MPC said it will respond by further tightening monetary policy as required. 

Industry experts react to BoE’s interest rate increase

This page will be updated throughout the day with comments from industry experts — stay tuned for further reactions

4:01pm

Antony Antoniou, CEO at Robert Irving Burns:

“There will be nothing ‘shallow’ about this recession if we continue to down this path, we will plunge headfirst into it.

“This latest rate rise presents a real risk to growth and paves the way for the IMF’s grim forecast to become a reality – setting the course to be the worst-performing major economy this year. 

“Inflation has passed its peak but on both an individual and corporate level, there is a collective belt tightening, with spending dramatically reduced and a focus instead on paying down debt. 

“Early green shoots in the property sector and renewed occupier demand are in danger of being wiped out by this unnecessary rate rise.

“The already burdened hospitality sector is again the canary in the mine, with a lack of disposable income and strikes driving customers away.

“We are also seeing weak retail sales on the high street taking the shine off the golden quarter and a wave of homeowners opting instead to pay off lump sum mortgage payments.”

3:00pm

Jason Tebb, CEO at OnTheMarket.com: 

“This 50 basis point rise, taking rates to 4%, was widely expected by the money markets given double-digit inflation, even though it is slowly edging downwards.

“However, the tenth rate rise in as many meetings will further exacerbate increasingly stretched affordability and is bound to affect the confidence of the average property-seeker. 

“The housing market continues to rebalance in terms of supply and demand, yet serious buyers and sellers continue to engage with each other despite rising interest rates and the higher cost of living.  

“With buyers potentially having even less buying power after today’s announcement, making sure properties coming to market are priced well is crucial.

“This is where an experienced local agent is a huge asset, ensuring property is marketed at a realistic and achievable level and steered through to successful completion, even if it takes a little longer in more challenging market conditions.” 

2:45pm

Jatin Ondhia, CEO at Shojin:

“After ten consecutive rate hikes, there is a worrying sense of déjà vu, as the BoE’s heavy-handed approach shows no signs of abating.

“Undoubtedly, this move will present further challenges ahead, just days after the IMF downgraded its growth forecast for the UK’s economy.

“As investors continue to navigate testing market conditions, the reduction of real returns through higher inflation represents a significant threat to both fixed income investments as well as equities.

“Against these headwinds, investors must keep a cool head and consider the tools at their disposal to make their money work harder.

“I would expect the diversification of investment portfolios to remain a prominent trend in 2023, as inflation remains in double figures, but rates rise.

“It is also likely that tax-efficient investments will gain increasing traction in the months ahead, with investors trying to manage returns in the most effective ways possible.”

2:00pm

Mark Harris; chief executive at SPF Private Clients: 

“While 4% may not be the peak for base rate, it is unlikely to be far off.

“Fixed rates are influenced by future base rate movements and therefore not directly linked to what is decided this week.

“Indeed, the pricing of fixed-rate mortgages, which soared after the mini budget, continues to drift downwards, with five-year fixes available from just above 4%.

“It’s unlikely to be long before we see five-year fixes cheaper than base rate.

“Those on base rate trackers will find their mortgage rate increase by 50 basis points. 

“A borrower with a £250,000 repayment mortgage on a 25-year term and a pay rate of 3.5% will see that rise to 4%, with monthly payments rising from £1,252 to £1,320.

“The cumulation of ten successive rate rises is significant.

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“A borrower with a £250,000 mortgage on a tracker pegged at 1% over base rate will have seen their monthly payments rise from £954 in December 2021, when base rate rose from 0.1% to 0.25%, to £1,461 today.

“With a variable rate deal, the link between the lender's variable rate and base-rate moves are less transparent.

“The lender may decide to pass on none, some, all or even more than the base-rate rise. 

“Buyers who believe fixed rates will continue to fall may wish to consider a variable or tracker rate product with no early repayment charges, moving onto a fix should rates become more palatable.

“However, if you can’t afford to be wrong – that is, if rates were to rise, you would struggle to pay your mortgage – then a fix would be the sensible option.”

1:23pm

Adrian Anderson, director at Anderson Harris:

 “Today’s rise to 4% was universally expected as inflation is not yet under control. 

"The question now is will the BoE base rate stay at this level or rise further, peaking at around 4.25% or 4.50%?

"And then how long it will have to stay at these levels to ensure inflation is under control?

"It’s a fine balancing act.

“It's almost impossible to remember that the BoE base rate stood at just 0.1% in December 2021. 

"Some 1.8m mortgage holders will see their fixed rate deal finish in 2023 and are yet to feel the impact of rising interest rates.

"These homeowners, along with the estimated two million on variable rate deals are likely to have a mortgage shock and face a significant increase in their payments at the same time as most of their other outgoings have increased markedly."

1:15pm

Simon Webb, managing director of capital markets and finance at LiveMore:

“This is the 10^th consecutive base rate rise taking it to a 14 year high of 4%.

"But not all members of the MPC agreed with this as seven voted for a 0.5% rise and two wanted no increase.

"This reflects the uncertainty around the economy such as when inflation will come back down to more palatable levels, and when and if we are going into a recession.

“Mortgage borrowers on trackers and those with fixed rates due to mature will once again be impacted by this rise.

"However, the market and lenders have priced this rise in so product rates should remain steady and have been coming down this year.”

12:47pm

Paul Wilson, chief investment officer at Channel Capital:

“A decade of record-low interest rates was not economically healthy or sustainable. 

“But moving from all-time lows to 4% in the space of 14 months has inevitably created challenges for lenders and borrowers alike.

“For lenders, it has hindered their efforts to secure senior debt from banks and institutions, many of which are reticent to deploy capital in the current climate of changing rates. 

“The shortage in senior debt — which is essential, given it makes up the majority of lenders’ funding stack — is in turn preventing or limiting lenders from issuing loans to clients; it becomes a vicious circle.

“At times like these, other sources of capital become more important. 

“Mezzanine finance is a prime example, and we’re seeing more lenders look to this option when building their funding stack.

“By securing mezzanine finance from more nimble, ambitious, or proactive investors, lenders are then able to provide much-needed confidence to the senior debt providers.

“As such, more must be done to champion the role of mezzanine finance in the current climate; it is keeping the lending industry active and is likely to remain in high demand over the months and years to come.”

12:15pm

Tomer Aboody, director at MT Finance:

“Borrowers will be hoping that this latest rate rise will be one of the last to come in quick succession.
 
“With Rishi Sunak’s government pushing to halve inflation by the end of the year, it is not unreasonable to question whether there could be an even bigger stimulus for the property market in the form of a possible reduction in interest rates from next year.
 
“One thing’s for sure: consumers are already preparing for more tough times ahead while they wait for some relief from aggressive rate rises.”

12:10pm

Emma Hollingworth, managing director of mortgages at MPowered Mortgages:

"While today’s decision by the Bank of England to raise interest rates by 0.5 percentage points will again increase the cost of borrowing across the UK, the mortgage market should remain resilient — this is especially the case given swap rates continue to make for positive reading.
 
“However, the cost of living is likely going to stay high for the foreseeable future. 

“It is important the industry continues to support homebuyers and remortgagers by keeping rates as low as possible and by innovating products to suit consumer needs.”