BoE hikes interest rate to 5% — industry reacts

The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority of 7-2 to increase the bank base rate by 0.5 percentage points, to 5%.

Two members preferred to maintain the rate at 4.5%.

The MPC will continue to monitor closely indications of persistent inflationary pressures — if there is evidence of such pressures, then further tightening in monetary policy would be required.

Industry reacts to BoE increasing base rate to 5%

This section will be updated throughout the day — check regularly for more comments from industry experts


Graham Beresford, co-founder and MD at Finspace:

"Increasing interest rates frequently and tamely has forced lenders to raise their rates.

"This leads to pulling rates and specialist products, causing additional pain for borrowers and the mortgage market constantly over-correcting.

"I hope that there are some temporary measures put in place for borrowers in terms of relaxed payment plans (paying off just the interest, increased payment holidays and other such measures as I see inflationary pressure as a short-term issue.

"This will lead the way for more demand for shorter-term products and additional secured borrowing where people have enough equity."


Josh Levy, CEO at Ultimate Finance:

"Today’s increase was a larger than anticipated movement but one that feels appropriate to send a strong message about the need to address signs of embedded inflation.

"Recent data has surprised to the upside and it has felt that the Bank of England have lost control in the absence of bold and decisive action to return inflation to target levels.

"It marks another blow for variable rate borrowers households, property investors and businesses in general and the pressure is very much on the BoE to get this right in the face of relentless headlines and commentary about the mortgage market in particular.

"It’s hard to see how the ‘medicine’ of higher interest rates won’t prove to be nearly as damaging as the inflationary problem itself.”

Douglas Grant, Group CEO at Manx Financial Group PLC:

"SMEs must take this as yet another reminder to review their existing lending structures and ensure they are prepared for further challenges. 

"Many prepared for these hikes by listening to lenders and locking in their debt into fixed rate structures, but other businesses that were not as forward-thinking face significant uncertainty.

"According to our recent research 40% of SMEs — compared to 27% last year — have had to stop or pause an area of their business due to a lack of external financing.

"The unavailability of finance is exacting a toll on SMEs and the UK economy, impeding growth precisely when it is most needed.

"The magnitude of the hindered growth is substantial and calls for novel solutions to bridge this funding gap.

"Since the economic upheaval caused by the pandemic, we have been advocating for a government-backed loan scheme that provides targeted support for specific sectors, bringing together both traditional and alternative lenders to secure the future of SMEs.

"As the government looks for ways to curb the highest rates of inflation in decades, the significance of implementing a permanent scheme cannot be underestimated; it could be the crucial factor that determines the survival or failure of many companies and, consequently, the overall economy.”


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

“The Bank of England’s Monetary Policy Committee has been spooked by the unexpected inflation figures yesterday showing stalemate in consumer price inflation and a rise in core inflation.

"We are still waiting for the previous base rate rises to filter through to the inflation figures but the impact is slow and laborious. 

“During the 13 years of low interest rates we had become used to, the Bank said that when rates do rise it will be a slow process, but the opposite has happened.

"The unprecedented 13th consecutive rise in the base rate in 18 months, with further rises anticipated, is a price Chancellor Jeremy Hunt is willing to pay, as bringing down inflation is the government’s ultimate goal. 

“This latest rise is likely to be reflected in swap rates, which have almost doubled in the past year and therefore fixed rate mortgages will continue to be more expensive.”


Ben Allkins, head of mortgages and protection at Just Mortgages:

“As swap rates respond to market expectations and lenders reassess their products, the role of brokers remains paramount to provide quality advice in a changing landscape.

"While we’d prefer to see base rate falling – like many – there’s no question a base rate change still serves as a reminder to consumers to seek advice and lock in a deal before it changes once again.

"That’s especially true for the wealth of remortgage business still up for grabs. 

“There’s no question the market will continue to present challenges and our message to our brokers has been clear; now is the time to take advantage of the opportunities available to not only train up and become the best broker you can be, but expand your skill set to boost your earning potential.

"Business protection is a key example of an under-served market with huge upside and real relevance in the current climate.”


Paul Oberschneider, CEO at Hilltop Credit Partners:

“The Bank of England continues to get it very wrong; raising the cost of money when growth is at virtually zero, and inflation is being caused by factors outside of consumption control, is a recipe for disaster.

“The focus should be on addressing the underlying causes of today’s inflation, including a lack of housing supply caused by a broken planning system and out of date mortgage products, and fiscal measures that don’t cause more consumer pain.”

Jatin Ondhia, CEO at Shojin:

“Rate-setters have delivered yet another blow today in their relentless battle against inflation, which continues to overpower the Bank of England's fiscal policy.

“Higher borrowing costs will continue to squeeze homeowners and property investors, which in turn will lead to more BTL investors exiting the market and increase rental costs due to a dwindling supply of property.

“The impact of this will be felt far and wide; renters in high-demand areas like London are already spending 40%-50% of their salary on rent.

“We can only hope that inflation starts to settle soon, but I expect more pain before relief comes.

“The past decade of ultra-low interest rates and cheap borrowing is well and truly over, and we are seeing a return to more 'normal' rates, which all borrowers have to get used to.”

Mark Harris, chief executive at mortgage broker at SPF Private Clients:

“There is a strong argument for pausing rate rises for now, giving the market time to settle down and adjust.

“Consecutive base rate rises have been painful and done little to stem inflation which is proving to be worryingly stubborn; it’s time for a different approach, letting the impact of the rate rises so far take effect, rather than causing continued anxiety and distress for borrowers.

“Those on base-rate trackers will find their mortgage rate increase by a further 50 basis points and the cumulation of 13 successive rate rises is significant.

“Fixed-rate mortgage pricing continues to edge upwards with many borrowers, particularly those due to come off cheap fixes, in for a real payment shock.

“Our advice is to plan ahead as much as possible and take action now; rates can be booked up to six months ahead and if when you come to remortgage, rates are cheaper, you can move onto another product.

“If you are not due to remortgage for a year or two, start paying down other debt, cut unnecessary spending and consider overpaying on your mortgage — if possible — to lessen the pain when the time comes.

‘With so much volatility in the markets, it is more important than ever that borrowers seek advice from a whole-of-market broker.’

Paul McGerrigan, CEO at fintech broker

“No surprises that the rising rate line continues upwards and hits 5%; this was of course inevitable after yesterday’s inflation news.

“If inflation is to drop to the initial 5% target set by Rishi Sunak, the Bank and No.10 need a faster slowdown in spending, so they have fired their only weapon again.

“One commentator believes the government needs to drive a recession to “shock” enough people and businesses into tightening their belts, which will ultimately tame inflation, but let’s hope it doesn’t come to that.

“The trend line will continue upwards before it starts to come down again.”

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