Property industry reaction to BofE rates hike

Director of Henry Dannell, Geoff Garrett, commented:

“We’ve recently seen both the European Central Bank and the US Federal Reserve implement rate increases of 0.5% and 0.75% respectively and this has forced the Bank of England’s hand to act similarly in an effort to tighten their grip on rising inflation.

If it hasn’t already, this latest base rate jump will reverberate throughout the mortgage sector almost immediately, the result of which will be a notably higher cost for homebuyers and owners when borrowing to climb the ladder.”

CEO of Octane Capital, Jonathan Samuels, commented:

“The Bank of England has acted forcefully in response to inflationary pressures with the largest base rate hike in over a quarter of a century and this is going to further rock what is already a very unsettled mortgage sector. 

While they walk the tightrope between curving inflation and avoiding recession, it’s the nation’s homeowners who can expect to pay the price with the monthly cost of their mortgage due to continue climbing.”

Director of Benham and Reeves, Marc von Grundherr, commented:

“This is the sixth time in a row that the Bank of England’s Monetary Policy Committee has chosen to increase interest rates, but today’s hike is the sharpest increase in borrowing costs since 1995. 

Those of us old enough to remember the nineties may view today’s jump as no reason to run for the hills just yet and it is important we remember that rates remain comparably low to historic levels.

However, it will certainly alarm a generation of homeowners who have known nothing other than a sub one percent base rate since purchasing their home and are now facing an end to this sustained period of mortgage affordability.”

Managing Director of Barrows and Forrester, James Forrester, commented:

“The situation for homeowners is pretty desperate right now and rising inflation has already pushed many households to breaking point, as they’ve battled to manage the increased cost of living. 

Unfortunately things look set to get quite a bit worse before they get any better, with inflation predicted to hit 15% by spring next year. 

As a result, the cost of homeownership will become even less affordable, pushing it further out of reach for those already struggling with the financial hurdles of buying and owning a home.”

Managing Director of HBB Solutions, Chris Hodgkinson, commented:

“The current economic landscape is fast becoming a melting pot for property market instability and we can expect a very turbulent time ahead, with regard to both the number of buyers entering the market, as well as the price they are able to pay. 

So far, the property market has stood firm in the face of increasing interest rates, but today’s jump is likely to put a dent in its otherwise impervious armour. As a result, we expect to see the rate of house price growth slow and it’s only a matter of time before this translates to a drop in property values in some areas of the market.”

Founding Director of Revolution Brokers, Almas Uddin, commented:

“The nation’s borrowers have been feeling the pressure caused by a string of incremental 0.25% increases implemented since December of last year. So today’s decision will certainly come as a concern for those already struggling with the increasing cost of their mortgage repayments. 

Unfortunately, this looks as though it’s just the tip of the iceberg and along with the wider cost of living, mortgage payments are set to keep on climbing.”

Further information can be found at https://www.revolutionbrokers.co.uk who commissioned the research