Bank of England cuts interest rates to 4.5% – consumer credit industry reaction

The Bank of England has cut interest rates from 4.75% to 4.5%, taking the base rate to the lowest level for more than 18 months.

The Bank of England Monetary Policy Committee (MPC) has voted to cut interest rates by 0.25% to 4.5%. The MPC voted 7 to 2 in favour of the cut, with two dissenting members preferring to cut rates by 0.5% to 4.25%.

Paul Broadhead, Head of Mortgage and Housing Policy at the Building Societies Association said “The BSA Property Tracker Report issued this morning shows first-time buyers are feeling more positive about the housing market and getting on the property ladder. Today’s decision by the MPC to cut the Bank Rate will therefore be very welcome news for aspiring homeowners and is likely to give a further boost to consumer confidence.

“However, despite their optimism, we know that first-time buyers face a considerable affordability challenge. Our Report shows around two-thirds of people consider the biggest barriers to homeownership are affordability of monthly mortgage repayments and raising a deposit.

“Bank Rate cuts alone will not ease affordability. We need a long-term housing strategy, alongside a review of mortgage regulation that considers the relative costs and benefits of stricter regulation versus the social benefits of homeownership, to support more first-time buyers into homeownership.”

Paul Heywood, Chief Data & Analytics Officer at Equifax said “Households are eagerly anticipating another potential base rate cut but lenders and homebuyers alike will just as closely be watching the touted future relaxation of mortgage lending rules.

“Simplifying responsible lending would be a welcome boon for prospective homeowners, although any future changes will still need to be navigated carefully in order to ensure positive consumer outcomes. Monthly repayments on new UK mortgages* remain stubbornly high compared to historic levels and even with a rate cut on the cards, the economic outlook remains uncertain.”

Ben Allkins, Head of Mortgages and Protection at Just Mortgages, said “Given the recent positive news on inflation, this had to be the logical next step for the central bank. While a persistent threat, we cannot become too blinkered by managing inflation and allow the economy to stagnate. This positive step will hopefully be the adrenaline shot the economy needs and serve as the starting pistol for many borrowers to put their plans in action.

“Compared to the previous cut, we have to hope swap rates react positively too and move as we’d expect. With a little bit of breathing space and financial year-end approaching for many lenders, it may be enough for some to take another look at their pricing. Brokers hearing this today need to mobilise and get out among their clients and their community to share this good news. We’ve seen already this year that appetite is certainly there. We now need to demonstrate the opportunities that exist as they try to navigate the market.”

Paul Noble, CEO of Chetwood Bank, said “Today’s interest rate cut marks a significant milestone for the UK economy – while many expected cuts this year, the timing remained uncertain. For many, this decision will come as a welcome relief, renewing confidence and optimism for the months ahead.

“However, with the economy clearly underperforming and inflationary pressures still at play following the Budget, there remains some uncertainty around how quickly rates will fall from here. Savers should take this as a reminder that the window for securing the best rates in the savings market may be closing.

“Taking a proactive approach now can help ensure that savings continue to deliver strong returns before any further cuts take effect. With further reductions likely later this year, now’s the time for savers to review their options and make sure they’re set on the best possible path.”

The Bank of England has cut interest rates from 4.75% to 4.5%, taking the base rate to the lowest level for more than 18 months.

The Bank of England Monetary Policy Committee (MPC) has voted to cut interest rates by 0.25% to 4.5%. The MPC voted 7 to 2 in favour of the cut, with two dissenting members preferring to cut rates by 0.5% to 4.25%.

Paul Broadhead, Head of Mortgage and Housing Policy at the Building Societies Association said “The BSA Property Tracker Report issued this morning shows first-time buyers are feeling more positive about the housing market and getting on the property ladder. Today’s decision by the MPC to cut the Bank Rate will therefore be very welcome news for aspiring homeowners and is likely to give a further boost to consumer confidence.

“However, despite their optimism, we know that first-time buyers face a considerable affordability challenge. Our Report shows around two-thirds of people consider the biggest barriers to homeownership are affordability of monthly mortgage repayments and raising a deposit.

“Bank Rate cuts alone will not ease affordability. We need a long-term housing strategy, alongside a review of mortgage regulation that considers the relative costs and benefits of stricter regulation versus the social benefits of homeownership, to support more first-time buyers into homeownership.”

Paul Heywood, Chief Data & Analytics Officer at Equifax said “Households are eagerly anticipating another potential base rate cut but lenders and homebuyers alike will just as closely be watching the touted future relaxation of mortgage lending rules.

“Simplifying responsible lending would be a welcome boon for prospective homeowners, although any future changes will still need to be navigated carefully in order to ensure positive consumer outcomes. Monthly repayments on new UK mortgages* remain stubbornly high compared to historic levels and even with a rate cut on the cards, the economic outlook remains uncertain.”

Ben Allkins, Head of Mortgages and Protection at Just Mortgages, said “Given the recent positive news on inflation, this had to be the logical next step for the central bank. While a persistent threat, we cannot become too blinkered by managing inflation and allow the economy to stagnate. This positive step will hopefully be the adrenaline shot the economy needs and serve as the starting pistol for many borrowers to put their plans in action.

“Compared to the previous cut, we have to hope swap rates react positively too and move as we’d expect. With a little bit of breathing space and financial year-end approaching for many lenders, it may be enough for some to take another look at their pricing. Brokers hearing this today need to mobilise and get out among their clients and their community to share this good news. We’ve seen already this year that appetite is certainly there. We now need to demonstrate the opportunities that exist as they try to navigate the market.”

Paul Noble, CEO of Chetwood Bank, said “Today’s interest rate cut marks a significant milestone for the UK economy – while many expected cuts this year, the timing remained uncertain. For many, this decision will come as a welcome relief, renewing confidence and optimism for the months ahead.

“However, with the economy clearly underperforming and inflationary pressures still at play following the Budget, there remains some uncertainty around how quickly rates will fall from here. Savers should take this as a reminder that the window for securing the best rates in the savings market may be closing.

“Taking a proactive approach now can help ensure that savings continue to deliver strong returns before any further cuts take effect. With further reductions likely later this year, now’s the time for savers to review their options and make sure they’re set on the best possible path.”