Central bank poised to deliver latest rate announcement as economic storm clouds gather
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1:08 p.m. That’s a wrap on our live blog, but stay tuned for more on today's decision from the team at Mortgage Introducer
We’re wrapping up today’s live blog on the Bank of England decision, but there’s still plenty more to come from the team at MI.
Thanks for following along, and stay tuned for all the latest broker and mortgage industry reaction on today’s rate hold – and what it means for the market!
12:59 p.m. Bad news for mortgage holders: Bank sees costs rising
The Bank’s Monetary Police Committee report said average monthly payments for mortgage holders coming to the end of their current fixed deals will likely rise by about £80 over the next three years.
Around 53% of mortgagors will see payments rise, according to the Bank – but about a quarter who chose a fixed-rate option at higher rates are likely to see some relief.
12:52 p.m. Iran war will mostly dictate BoE’s path ahead, says governor
We’ve been following Bank of England governor Andrew Bailey’s press conference this afternoon following the central bank’s decision to keep Bank Rate unchanged at 3.75%.
In his opening remarks, Bailey indicated the Bank’s approach for the months ahead remains highly dependent on what happens in the ongoing US-Iran war, and whether oil prices continue to spike as the conflict rumbles on.
The central bank’s path, he said, will “depend on the size and duration of the energy price shock.”
12:15 p.m. Reaction pours in
We’ve got all the latest from the UK mortgage industry on the Bank of England’s decision to leave interest rates unchanged – an announcement that didn’t catch many by surprise.
“As expected, the Bank has kept its powder dry on any movement on rates,” Harry Arnold of Anderson Harris told MI’s Bryony Garlick. “The situation in Iran is at this stage too unpredictable for the Bank to make a call on whether to increase rates. They will leave the door open to hikes over the summer when more postwar economic data is released and base decisions on that.”
But some say the Bank of England is just putting off difficult decisions that lie ahead.
“The Bank of England is kicking the can down the road, but households can’t afford to do the same,” said Alex Beavis, interim director of retail banking at LHV Bank. “While households are counting the cost already in terms of higher fuel costs, there will likely be a further knock-on impact in the months ahead as those raised energy costs feed into the price we pay for other items, such as food.”
Beavis sees at least one base rate hike this year as “inevitable”.
For north London real estate agent and former RICS residential chairman Jeremy Leaf, today’s announcement doesn’t look set to move the needle much for the housing sector. “As far as the impact on the property market is concerned, the effects are likely to be fairly minimal,” he said, “although encouragingly, we have noticed some mortgage costs starting to creep down again. This will certainly help to improve confidence, which remains at a relatively low ebb.”
And Danny Belton of The Money Group described the BoE’s move as a “sensible” one amid the ongoing conflict in Iran and inflationary pressures.
12:10 p.m. Voting breakdown
Here’s who voted for the call to leave rates unchanged:
- Andrew Bailey
- Sarh Breeden
- Swati Dhingra
- Megan Greene
- Clare Lombardelli
- Catherine Mann
- Dave Ramsden
- Alan Taylor
Voting against was Huw Pill, who in recent weeks has flagged the risks posed by inflation to the UK’s economic outlook. He voted in favour of a 0.25% hike.
12:07 p.m. Inside the Bank of England’s latest decision
In its statement accompanying the April decision, the Bank said eight members voted to maintain Bank Rate at its current level. One member voted for a 25-basis-point increase.
Inflation “is likely to be higher later this year” due to the impact of higher energy prices, the Bank said. Still, the labour market is also loosening – “and a weakening economy could contain inflationary pressures,” the Bank said. Financial conditions will also support an easing of inflation over time, according to the central bank.
12:00 p.m. BREAKING: Bank of England holds rates steady
The Bank has announced its decision – and there are no surprises here.
The Monetary Policy Committee is leaving rates unchanged at 3.75%, the central bank said in its statement, holding steady as it weighs up its next move.
More to come – including on the Monetary Policy Committee report, which has also been released.
11:53 a.m. We’re just minutes away from the Bank of England’s next rate decision
If you’re just joining us today, thanks for tuning in on a big day for the UK economy – and its housing and mortgage sectors.
The Bank of England is poised to deliver its next interest rate decision in just a few minutes, and we’ve got you covered with all the updates here on Mortgage Introducer.
Anything other than a rate hold by the central bank would be a surprise, with decisionmakers expected to keep rate moves on ice as they weigh up how the US-Iran war is impacting the national economic outlook.
Stay tuned to MI for all the latest.
11:50 a.m. Bank of England readies decision as geopolitical turmoil intensifies
The US-Iran war has cast a long shadow over economic forecasts during the past two months, and the Bank of England will deliver today’s decision amid some bad news for financial markets on the conflict.
Oil prices soared again on Thursday as Donald Trump warned the US blockade of Iran could last for “months” – stoking fears of a more protracted war than expected.
The war has already jolted Britain’s mortgage market, sparking a flurry of rate hikes and product withdrawals by major lenders, and a further escalation could put pressure on the Bank of England to hike rates in the months ahead in an effort to stave off a potential inflation uptick.
11:41 a.m. Here’s where you can watch the Bank of England’s MPC report press conference
The central bank will be holding a press conference at 12:30 p.m. on the release of today’s MPC report – and you can watch along here:
11:30 a.m. Industry keeping a close eye on MPC report for clues on BoE outlook
A rate hold by the BoE might seem like a surefire thing, but plenty of mortgage industry members will closely watch the MPC (Monetary Policy Committee) minutes to see how decisionmakers are assessing the current economic landscape.
“The rate decision itself is unlikely to have any impact on mortgage rates, but the commentary could have,” Graham McClelland of Gen H told MI’s Bryony Garlick.
“The market is looking for signals of what comes next. I think there’s significant uncertainty regarding how rates will evolve over the short to medium term. I’m expecting lots more volatility in the coming weeks or months – but that’s coming from external factors rather than from MPC actions.”
11:23 a.m. Inflation risks likely to keep BoE on hold
Versed’s Katrina Horstead told MI she’s not expecting anything but a continued rate hold from today’s decision.
“We are seeing the same expectation that the Bank of England will hold rates for now, largely due to inflation ticking up again to 3.3% in March,” she said. Jumps in the cost of fuel, air fares and food mostly caused that spike, and kept the consumer price index (CPI) well above the Bank’s 2% target.
“In the meantime, we’re advising clients not to try and time the market,” she said. “Instead, we’re focusing on securing suitable options early, especially for those approaching the end of fixed deals, and making sure there’s flexibility built into their plans.”
11:15 a.m. The mortgage industry has its say
We polled the mortgage industry on their expectations for today’s announcement by the BoE, and the results so far have been definitive.
Eighty-seven percent (87%) of respondents to our survey, sent out on LinkedIn this week, said they’re expecting a hold – with only a tiny share of mortgage professionals expecting a hike or cut.
What are you expecting? There’s still time to weigh in on our poll ahead of the 12 p.m. announcement: be sure to vote here.
11:10 a.m. Explainer: How do the Bank of England’s decisions actually impact UK mortgage rates in the first place?
We know you’ve fielded this question a million times in the past – but here’s a recap.
When the Bank of England moves its Bank Rate, it doesn’t change borrowers’ mortgage rates directly. It changes the cost of money for lenders, which then feeds through into what borrowers pay.
A higher Bank Rate pushes up banks’ funding and hedging costs via money markets, gilts and interest rate swaps, which are key ingredients in the pricing of new mortgages.
Tracker mortgages usually move almost one-for-one with Bank Rate, while lenders tend to adjust their standard variable rates in the same direction but usually with more discretion on timing and size.
Fixed-rate mortgages are driven more by where markets think Bank Rate is going over the next two to five years. That’s why fixed rates often change in advance of, or even without, a Bank move as swap rates react to new data and Bank of England guidance.
11:00 a.m. Just an hour to go until the BoE’s big call
The Bank of England will reveal its latest rate decision in an hour, and we’ve got you covered here at Mortgage Introducer.
Here’s our very own Rommel Lontayao earlier in the week, catching up with mortgage professionals about their thoughts on the central bank’s next move.
Both Neil Mulhearn of Echo Finance and Bob Singh of Chess Mortgages are expecting a rate hold, although Mulhearn has his eye on the potential for possible hikes down the line.
“Inflation is way above target, driven primarily through oil price increases,” he said, “and this will start to filter down to other commodities as suppliers factor in increased distribution costs.”
10:58 a.m. Mortgage industry navigates choppy economic waters
Homebuyers and mortgage professionals have grown accustomed to a volatile economic environment over the past few years – and the start of this year has been no different, with whipsawing mortgage rates and an uncertain outlook for the national economy causing plenty of drama.
Emily Franks of Emily’s Mortgage Services told MI’s Bryony Garlick in the build-up to today’s announcement that she’s not expecting fireworks from the Bank of England today, and says she’s preaching calm in the face of all that economic turbulence.
“I think it’s really hard to advise clients at the moment in terms of the Bank of England, but I’m expecting a hold,” she said. “I’ve done a couple of trackers this week as short-term solutions for clients who intend to move this year, but ultimately, I’m advising stability for clients – where possible – for a minimum of two years.
“The market is just too volatile for the majority of my clients who are young families and may not be able to absorb such a quick jump if the rate does increase.”
10:52 a.m. Here’s what’s expected from the central bank today
Financial markets and economists are pretty confident the BoE will deliver another rate hold in today’s meeting, continuing the wait-and-see approach it’s adopted throughout the year so far.
Major central banks are weighing the risk of an inflation flareup from the US-Iran war against prospects of a sharp economic downturn – and the BoE is expected to follow the US Federal Reserve and Bank of Canada, which announced their latest decisions yesterday, in holding rates steady.
Of more interest to mortgage market watchers could be the monetary policy report, set to arrive alongside today’s rate decision, which will include the Bank’s first full set of economic forecasts since the conflict erupted at the end of February.
10:45 a.m. It’s decision day for the Bank of England
Hello and welcome to our latest live blog on a big day: the Bank of England is scheduled to deliver its latest decision on interest rates at 12 p.m. this afternoon.
We’ll have all the latest updates from the central bank – and reaction pouring in from the mortgage industry – on what could be a pivotal day for the housing market and wider economy. Stay tuned!
