Rate hold steadies sentiment, but brokers warn pressure remains
The Bank of England’s decision to hold the base rate at 3.75% was widely expected, but brokers say it does little to ease the underlying pressure on borrowers.
While the pause offers short-term stability, advisers point to continued movement in lender pricing and affordability constraints that are still shaping how clients approach decisions.
Nouran Moustafa (pictured top left), of Roxton Wealth, said the decision would likely be welcomed by borrowers, but warned against complacency.
“Today’s decision to hold the Bank of England base rate at 3.75% will probably be received as a welcome pause, but I don’t think borrowers should confuse a hold with total calm,” she said. “The reality is that, for many clients, this is still a market that requires careful planning rather than guesswork.”
That shift is becoming more visible in borrower behaviour, with expectations resetting after years of ultra-low rates.
“A lot of borrowers have now accepted that we are unlikely to return any time soon to the ultra low rate environment people got used to for years, so the conversations are becoming less about waiting for the ‘perfect’ moment and more about making the right decision with the information available today,” Moustafa said.
Across the market, activity remains steady but more considered. Borrowers nearing the end of fixed deals are engaging earlier, first-time buyers are taking a more cautious approach to affordability, and landlords are placing greater emphasis on deal viability.
That change has not removed urgency, but altered its nature.
“It is no longer panic-driven urgency, but more of a practical urgency. Clients understand that even if the base rate holds, mortgage pricing can still move, lenders can still reprice, and affordability can still shift,” Moustafa added.
Katrina Horstead (pictured top, left centre), of Versed, pointed to continued adjustment from lenders, with recent repricing reflecting a correction after earlier caution rather than a clear directional move.
“The key message we are giving clients is to focus on securing the right deal for their circumstances and ensuring their plans remain resilient, rather than trying to predict the exact timing of rate changes,” she said.
For some, however, the decision carries a more restrictive undertone. Harry Arnold (pictured top, right), of Anderson Harris, said that, against earlier expectations of cuts, holding rates effectively tightens conditions.
“Keeping rates as they are is in effect a de facto hike from where base was heading, so those cuts pencilled in not happening is in many ways restrictive in itself,” he said.
He pointed to a changing economic backdrop, with elevated rates and rising unemployment shaping the environment borrowers are navigating.
“The economy is in a very different place to the one we found ourselves in at the outset of the Ukraine conflict. Rates are already elevated and unemployment is rising. Not much bargaining power amongst employees and global inflation at around 2.5%,” Arnold said.
Ahead of the decision, brokers had already flagged how geopolitical tensions were complicating the outlook for rate policy. Graham Taylor (pictured top, centre right), of Hudson Rose, said competing pressures continue to pull expectations in different directions.
“Inflationary pressures as a result of the war may point to increases in the base rate further this year, however given the knock on effects on growth there is a valid argument to say the Bank may opt to reduce the rate at some point to help stimulate the economy,” he said.
He added that borrowers remain highly sensitive to rate changes, particularly those coming off historically low deals, with advisers continuing to encourage clients to secure options early and review before completion.
Jeni Browne (pictured top, centre), of Mortgage Finance Brokers, said policymakers remain constrained by competing economic forces.
“With the certainty of inflation but an underperforming economy the MPC are caught between a rock and hard place,” she said. “Fixed rates may soften a little if the Middle East conflict is resolved soon but any further escalation puts further fixed rate hikes and also possible base rate hikes into the realms of ‘highly likely’.”
The decision signals stability, but the strategy has not changed. As Moustafa put it: “don’t try to perfectly time the market – build a mortgage plan that works now, remains affordable, and gives you resilience if rates stay higher for longer than expected.”
