BBR decision - comments from Rob Clifford, Stonebridge

21 September 2023

“I would think that yesterday’s inflation figures - showing a surprise drop, albeit a relatively small 0.1% fall to 6.7% - have swayed enough members of the MPC to think that a further rise in Bank Base Rate was worth putting off right now, given the impact any further rise would have, particularly on mortgage costs, but also other forms of debt which track BBR.

“As a business that arranges over 80,000 mortgages a year, we see the real and harsh impact of affordability pressure affecting thousands of borrowers, and while this decision does not necessarily mean we are at ‘peak BBR’, after consecutive rises in BBR, it does at least feel like we are nearing the top.

“In the mortgage market, some of the very largest mainstream lenders have dropped their rates recently, but one suspects this is less to do with BBR or indeed swap rates, and more to do with a need to secure business volume in a market which is very reliant on remortgage and product transfer business.

“We are seeing encouraging and consistent volumes of purchase cases, but more broadly in the market, purchase transactions are clearly significantly down on the prior year, and it will need more than a decision to hold BBR to inject some life into it – the calls for Government intervention here are only likely to grow louder.”