The BoE has increased interest rates to 5.25%

BoE raises interest rate to 5.25% — industry reacts

The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority of 6-3 to increase the bank base rate by 0.25 percentage points, to 5.25%.

Two members preferred to increase the rate to 5.5%.

The MPC said it will continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole — if there is evidence of such pressures, then further tightening in monetary policy would be required.


Industry reacts to BoE increasing base rate to 5.25%

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


Vikki Jefferies, proposition director at PRIMIS:

“The 14th consecutive base rate rise will undoubtedly compound the financial pressure that many borrowers are experiencing amid the still prohibitive cost of living crisis. 

“Industry players need to continue considering ways to address this in their support for customers, particularly now that the new Consumer Duty regulations are in force. 

“By working together proactively to secure the best outcomes for their customers, lenders and brokers will be better equipped to navigate this period and help ease any concerns borrowers may have. 

“To help with this, advisers should capitalise on the support available to them.

“Networks offer invaluable access to crucial resources, products, technology and training which will enable them to secure the best solution for their clients’ mortgage and protection needs.”


Jo Carrasco, business partnerships director at Stonebridge:

"Given the rate increase we saw from the US Federal Reserve last week, today’s announcement will not come as a huge surprise.

“This latest increase intensifies the challenge for mortgage advisers to guide new and existing clients through potentially higher borrowing costs, all whilst the cost-of-living continues to challenge UK households.

“However, it’s during these challenging conditions that mortgage advisers can fully demonstrate the value they can add to the financial wellbeing of existing and aspirational homeowners."


Douglas Grant, Group CEO at Manx Financial Group PLC:

“Many SMEs 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 damaging knock-on effects.

"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.” 


Jatin Ondhia, CEO at Shojin:

“We cannot underestimate the implications of elevated borrowing costs across the property market.

"Homeowners are facing higher mortgage rates than at any point since the financial crisis, while developers are also finding it harder to access finance.

"Consumers, investors and businesses will all be hoping that we are nearing the end of this economic turbulence.

"Higher interest rates are here to stay, but we undoubtedly need to arrive at a point where the base rate is not continuously rising, giving everyone the chance to take more confident action where their money is concerned.”


Paresh Raja, CEO at MFS: 

“That fact that base rate now resides above 5% is not in itself a significant issue; this was the norm before 2008.

“But the jump up from a meagre 0.1% has come in a relatively short space of time (since December 2021) and has offered borrowers, investors and businesses little time to adapt to higher rates.

“Economists are suggesting the base rate may not rise as high or as quickly as once thought, and the rates available on products are starting to reflect that.

“Today’s hike shows that there is some good news in that the jump was smaller than previously predicted, allowing lenders to reassess their rates accordingly.

“But right now, flexibility and communication from lenders remains of utmost importance, helping both existing and prospective clients to borrow responsibly without pulling products out from under them or being too rigid in the terms of loans.

“The market will realign to a higher base rate in due course, but today’s latest hike reaffirms that lenders must double down on a proactive approach to supporting property owners and buyers who will feel the effects of it.”


Duncan Kreeger, CEO and founder of TAB:

“The latest hike in interest rates means that providers of bridging or development finance will need to display even greater creativity in finding economically viable solutions to keep projects running.

“With ongoing labour shortages, a demanding and ever-evolving regulatory environment, and escalating costs across all fronts, developers are facing significant challenges.

“Lenders must now adopt innovative approaches to ensure solutions are economically viable and keep Britain building.

“The economy cannot afford further delays to construction, and it is the responsibility of all those involved to support its continuation.”



Sarah Thompson, managing director at Mortgage Scout:

“The further increase to the base rate is the 14th in as many months, and it’s unlikely this will be the end of increases in 2023.

“Since last month’s reduction in the inflation rate we’ve seen lenders reduce their interest rates by around 0.4%.

“We believe it’s unlikely that mortgage rates will increase immediately as the banks have already factored this into the products that are currently available.

“What I would urge everyone to do is really look at your BTL properties, even if you have a lower fixed mortgage rate [as] the likelihood is that rates will probably be higher when you come to renew.

“Paying extra now — if you can afford to — will help cushion the blow if your mortgage rate increases and has the added benefit of reducing your mortgage term and therefore the interest you pay overall.

“It is crucial to speak to your broker now to understand your options so that you are prepared.”


Jo Breeden, MD at Crystal Specialist Finance:

“The base rate rise was expected from 5% to 5.25% from financial markets alike — the BoE had little choice given the current rate of inflation.

“No doubt inflation will fall further when the July data is available, but again it will be way beyond where the BoE want it to be, and so further rises are to be expected.

“In our half year broker survey, 40% thought it would peak above 6%.

“While swap rates have eased somewhat since June’s inflation data, as of yesterday, two years swaps were still above 5.5%, and this time last year they were just under 2.5%. So that’s no great comfort for home buyers or sellers looking for a new fixed-term deal.

“It’s hard to call when the BoE will stop the base rate rise cycle, [but] whatever the outcome, the property market will continue to be difficult, [yet] dampening property prices creates opportunities for professional investors.

“If brokers are struggling at the moment in the residential space, they should look to diversify and support property professionals and businesses alike.”


Jonathan Samuels, CEO at Octane Capital:

“While an unpopular opinion, it could be argued that the BoE hasn’t been daring enough in their decision to increase rates again today, and really another 0.5% increase was needed in order to tame inflation.

“It’s far better to have a short period of pain brought about by higher interest rates, rather than a sustained period of significant economic turmoil and uncertainty.

“Take America for example, where rates started to rise at a similar time to the UK, but in a far more aggressive manner; inflation there is already back to 3% and so the target of 2% is within reach.

“If we had been as bold, then we too would be close to achieving a much heralded soft landing and would be far closer to interest rates falling than we are now.”

Leave a comment