Interest rates rise

This is also the fifth consecutive interest rate increase seen so far in 2023, which has followed the same pattern as 2022 which saw 8 consecutive base rate jumps. 

As a result, the current rate of 5% is the highest seen in over 15 years since April 2008 when the base rate also sat at 5%.

CEO of Octane Capital, Jonathan Samuels, commented:

“As of yet, the Bank of England’s attempts to curb inflation haven’t quite gone to plan and so today’s increase was to be expected. 

While a half a percent jump may seem substantial, it should help the Bank of England regain a grip over the situation at hand, as currently, it trails the Federal Reserve and needs to catch up if we want to see inflation fall like it has in the United States. 

So all things considered, today’s increase is probably appropriate, although this isn’t the news the nation’s borrowers were hoping for.”

Managing Director of House Buyer Bureau, Chris Hodgkinson, commented:

“So far the UK property market has weathered the storm of twelve consecutive interest rate hikes and while we’ve seen marginal signs of house price depreciation, there’s nothing to suggest a thirteenth increase will bring the walls crashing down around us. 

It’s also important to note that a third of homebuyers now own their house outright and so they aren’t feeling the strain of increased borrowing costs. 

That said, any base rate increase is sure to be passed on by lenders to the nation’s homebuyers and this is likely to mean higher borrowing costs and fewer available mortgage products. This will inevitably have an impact on buyer purchasing power and, as a result, we can expect to see more protracted transaction timelines and a further cooling in property values as the market continues to find its feet.”

Managing Director of Sirius Property Finance, Nicholas Christofi, commented: 

“Interest rates are now at their highest in over 15 years, but it’s not just the higher cost of borrowing that will be weighing on the minds of UK homebuyers, it’s the consistency at which rates are climbing. 

Many buyers are finding that, having agreed a mortgage in principle, the goal posts have already moved by the time they find their ideal home and they’re having to return to the drawing board to reassess just what they can afford to borrow.”

Managing Director of Barrows and Forrester, James Forrester, commented:

“It certainly seems as though the Bank of England has lost its grip on inflation and so they’ve continued to pile more misery onto borrowers with yet another rate increase. 

This will do nothing to revitalise what has become a rather weary looking property market in recent months and is sure to dampen buyer demand as lenders pass on this increase in the form of higher mortgage rates.”

Director of Benham and Reeves, Marc von Grundherr, commented:

“The market remains in fairly good form considering interest rates are at their highest since 2008 and we expect this will now bring about a reversal in market fortunes. 

The more inflated areas of the market, such as London, largely trailed their more affordable counterparts where pandemic house price growth is concerned.

However, buyers in these regions are better placed to absorb higher borrowing costs and so we expect the likes of the London market to remain largely unfazed going forward.

As a result, we expect stronger market performances to materialise compared to some of the other more affordable areas of the market.”