What brokers expect from Thursday's MPC rate decision

With the Bank of England's Monetary Policy Committee (MPC) set to announce its latest base rate decision on 18 June, mortgage brokers across the UK are near-unanimous in their expectation there will be no change.

But behind that consensus lies a growing frustration that holding rates, while preferable to a rise, does little to address the structural pressures weighing on the housing market.

Luther Yeates (pictured top left), founder and head of mortgages at Orton Financial, told Mortgage Introducer the case for a rate increase is being overstated. "We have headline inflation, which is high, but it's all supply side," he said. "If we increase the base rate, it won't do anything. It will just make your life more difficult and my life more difficult, but it won't actually bring down the rate of inflation that we're looking at."

Nouran Moustafa (pictured top right), executive financial and mortgage adviser at Roxton Wealth, was equally direct when speaking to Mortgage Introducer. "They will hold it. I'm very confident they will hold it." With geopolitical pressures easing following the conclusion of the Iran war, she expects high street lenders to begin bringing mortgage rates down independently of any MPC move.

Whether specialist and off-high-street lenders follow suit, however, remains the critical question, and one with direct consequences for rental prices and landlord behaviour if they do not.

Why a hold is not a solution

Yeates argued the MPC's preference for inaction has become habitual. "They seem happier as a committee to do nothing, and that it's better to do nothing than to do something. They were quite slow originally when we needed to actually start cutting."

He also cited a telling signal from lenders. "Someone like HSBC phoned me and said they're borrowing from abroad at the moment, lending into the UK – borrowing at around 1%, making a massive spread. The banks are just profiting at the moment. It's not like interest rates need to be this high, it's just the expectations being set around high rates by the Bank of England."

Moustafa pointed to a broader affordability trap, with first-time buyers stalling on purchases over payment anxiety. "A lot of people right now, they see houses, they like the houses but they don't want to put an offer in because they are mindful that the monthly payment is going to be unaffordable," she said.

For those approaching remortgage, she expects the mood to shift quickly if conditions improve. "I think remortgages that are due within six months will start making contact earlier because they would want to secure a rate," Moustafa said. She typically reaches out to clients three months ahead of expiry but anticipates that window compressing as the market adjusts.

Trackers, triggers, and the advice challenge

Both advisers have shifted significant portions of their client books towards tracker products in recent months.

Yeates has systems in place to act quickly if the picture changes. "If the bank turned around and said we're going to increase our rates, we would probably have to go through all of our clients on trackers and seriously take a look at do we now move you to a fixed rate," he said. "The expectation will be that even if they're not on a product which is linked to base, everyone will assume fixed rates will increase, so let's get something now rather than wait."

Moustafa emphasised that suitability must govern every decision. "If my client is an auditor earning six figures a year, I can definitely advise him on a tracker rate," she said. "But if my client is in a lower paying job that pays £30,000 a year, I would rather take the expensive certainty of a fixed rate rather than expose them to unexpected financial difficulty."

UK Finance has forecast 1.8 million fixed-rate mortgages will expire in 2026, and for many of those borrowers, variable products will be unfamiliar territory. "There's a lot of business to be done," Yeates said, "But it's around helping clients understand something which they've very rarely gone for beforehand." That education challenge is one of the defining tasks facing mortgage brokers preparing clients for a shifting UK rate environment.

Looking ahead

Moustafa sees a longer-term positive emerging from the current environment. "The good thing about this whole base rate situation is that it's pushing advisers towards educating clients more, and it's pushing clients towards educating themselves more," she said. "More and more people are discovering tracker rates and capped rates, which is extremely good because now they can start having some sort of economic awareness."

Yeates, meanwhile, pointed to a structural tension he believes will outlast any single MPC decision. "We know we're in that environment where rates aren't where they should be," he said. "We have a government that wants the housing market to move, but they're the ones that are really holding it back."

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