Impartial advice critical in high-rate environment - Rob Clifford, Stonebridge (MPC announcement)

02 November 2023

“The mood music prior to this announcement appeared to point to the MPC holding Bank Base Rate due to a number of factors, not least a fall in UK food inflation announced earlier this week and, I suspect, a growing sentiment that businesses and consumers could not tolerate much more in terms of further rate hikes.

So, it’s not surprising to see today’s decision, however we must be mindful that holding BBR does not mean a cut in bank base rate will follow anytime soon. A common view is that this could stay at today’s level until the early part of 2025, even if – as anticipated – inflation does fall further.

We are all in a new higher rate environment that we need to get used to – particularly mortgage borrowers who are coming to the end of deals, as they will be facing a material shift in costs at a time when, for many, affordability is squeezed in general. Impartial advice about what to do, is even more critical. Mortgage product rates have continued to inch down in recent weeks, which is clearly good news, and this is a trend that could continue even without a fall in BBR.

Lenders need to lend and hopefully a period of strong competition will show up in competitive mortgage pricing in the weeks and months ahead.”