Optimism strikes the market, as BoE keeps base rate at 5.25%

Four members preferred to increase the rate to 5.5%.

The committee also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves by £100bn over the next 12 months, to a total of £658bn.

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 Bank of England maintaining base rate at 5.25%

Andrew Montlake, managing director at Coreco:

"Common sense has finally prevailed and this pause for breath to buy time to analyse further data will be welcomed by many.

"There really is no point in heaping further misery on mortgage borrowers who have been hammered enough already. We have already seen that inflation, and most importantly core inflation, have started to recede as previous rate rises continue to filter through the system and this is expected to continue.

"It now looks like we are at the very top of the interest rate cycle, with swap rates continuing to ease and giving lenders more space to engage in a rate war as they battle for market share and look to get a good start to 2024.

"As this competition increases, we will see more products available starting with a 4% rather than a 5% and this will inevitably start to encourage more buyers back into the market as they seek to take advantage of the buyers' market while it lasts."

Gary Boakes, director at Verve Financial:

"We can finally breathe a sigh of relief after 14 straight base rate rises; this is truly fantastic news.

"The early thoughts were that inflation was going to stay stable and even rise this month, so the unexpected core inflation drop yesterday means that we have time now to see if what they have been doing for the past 18 months is working.

"The close vote of 5-4 doesn't mean we are out of the woods yet but with swap rates and mortgage rates dropping it feels like there is light at the end of the tunnel."

Gareth Lewis, managing director at MT Finance:

"Some good news at last for the market, the beginning of the consistency and stability it needs.

"Too much uncertainty is not good for confidence, but with inflation coming down further and the Bank of England choosing to keep rates where they are, in theory this should be the peak.

"The knock-on impact is that borrowers have a better idea as to where they stand and where mortgage pricing is going to be. Don’t get me wrong – plenty still needs to be figured out as affordability is still an issue, thanks to the many rate rises we have already seen. However, this is something lenders can strategise around in terms of products and people will be more willing to take out a mortgage as they will have a better idea of where rates will be in six months’ time."

John Phillips, CEO at Spicerhaart and Just Mortgages: 

"This will certainly be a positive for mortgage holders, borrowers and the general public who have been demoralised by fourteen straight interest rate rises.

“While yesterday’s good news on inflation certainly made the pause more palatable for the MPC, there’s no question high household costs – particularly fuel, food and energy, still present a challenge. As a result, affordability will remain a clear obstacle for both borrowers and brokers.

“Brokers will continue to play a critical role by using all the tools available to help clients make the numbers work, whether that’s the many households still set to remortgage or those that need to move. Lenders have played their part in recent weeks to reduce rates considerably and news of stability in interest rates may allow lenders to loosen the purse strings a little further.”

Thomas Davies, MD at Alexander Hall:

“Borrowers will be pleased that the Bank of England has decided not to increase rates, and this will only serve to reinforce the positive news that mortgage prices are falling as cooling inflation and the reduction in swap rates bring some needed respite.

"With markets anticipating that the Bank of England has neared the top of its rate increases, borrowers should take comfort in the fact that mortgage products are becoming more palatable.”

Nathan Emerson, CEO at Propertymark:

“It’s positive to see that the bank rate has remained unchanged this time around and will be reassuring for those looking to enter the housing market especially.

"This now indicates that rises to interest rates have been impactful and that the fall in house prices has helped to even the affordability playing field and keep the wheels of the housing market turning.”