Here's what they're saying:
Rightmove’s property expert Tim Bannister: “The era of historically low-interest rates looks to be over, which is making it more challenging for those new first-time buyers who are stretching themselves financially to try and get out of the frenzied rental market and onto the housing ladder.
“However, compared to the volatility of a few weeks ago, mortgage rates have now started to stabilise and fall. As today’s rise was expected, we don’t think we’ll see any significant changes to new fixed-rate deals based solely on today’s interest rate rise.
“Mortgage payments will be much more manageable for those first-time buyers who have been lucky enough to save up a bigger deposit of 25%, as they may find that monthly mortgage payments on a typical first-time buyer home are lower than their current monthly rental payments.
"It’s important to look beyond the headline numbers, because, while “like-for-like” mortgage costs have been increasing, mortgage brokers and lenders will be able to help people assess the different options available to manage their costs and see if they can afford to move.”
Simon Gammon, Managing Partner, Knight Frank Finance: "I would be surprised if we see a meaningful rise in mortgage rates in the coming days even with such a large rise in the base rate.
"Many fixed rate products sit somewhere between 5.5% and 6%, which is still high when you consider the base rate is at 3%. Mortgage rates have only just started adjusting following the mini-budget and that should have further to run. Swap rates – instruments used by lenders to price mortgages – have been trending downwards. If they continue to do so, we believe that some borrowers could still enjoy fixed-rate products starting with a four in the weeks ahead.
"This will of course be dependent on the lenders and how they view the outlook, but we think there's room for more easing in mortgage rates or at the very least a plateau."
Tom Bill, head of UK residential research at Knight Frank: “This latest bank rate rise is the clearest indication yet that a 13-year period of ultra-low borrowing costs is over. Buyers and homeowners need to remember the impact of the mini-Budget won’t last forever and mortgage rates should start to calm down from the levels reached last month. However, more than four million first-time buyer mortgages have been issued since rates were cut to 0.5% in March 2009, meaning many people don’t have first-hand experience of monthly mortgage bills rising meaningfully. This normalisation of rates plays a central role in our forecast that prices will fall back to their summer 2021 levels.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau: "Another month brings another rise to the interest rate, with no end in sight as recession looms ever closer and the Bank of England continues its attempts to battle with the inflationary pressures bearing down on the UK economy. Those who have secured a new fixed-rate deal in the last couple of months will be breathing a sigh of relief, but for anyone on an SVR or tracker mortgage, this news could be a real source of concern. Expectations are that the industry will see an upwards trend of defaults on mortgage payments in the coming months, so we urge anyone fearing that they may struggle with mortgage payments to go straight to their mortgage provider for guidance.
“For prospective homeowners, it’s a hostile environment to be buying in, but equally it seems doubtful that market conditions will become any friendlier in the near future – speaking to a whole of market adviser is, as always, the best course of action.
“In this enduring period of rising interest rates and inflation, homeowners should prioritise future-proofing their mortgage and property ownership plans. Advisers have now helped clients through eight months of consecutive rate rises, and although the situation is far from ideal, at least it puts them in the best possible position to offer advice to clients that will stand the test of time. However, the onus to help shouldn’t exclusively fall on mortgage providers – as the Autumn Statement approaches, it shall be interesting to see what if any forms of support will be introduced by the government.”
Marcus Dixon, director of UK residential research at JLL: “A further rise in the base rate, while uncomfortable for those not locked into fixed rates, was not unexpected. With it being more a question of when rather than if rates would rise. This will of course impact the housing market, albeit this increase was likely already priced into new fixed rates deals and market forecasts. The MPC announcement does not change our outlook.
"JLL are forecasting that higher interest rates, combined with the winding down of the Help to Buy scheme, will mean we see a 30% fall in transactions in 2023 compared with 2022, around 300,000 fewer sales nationally. JLL are forecasting prices will fall too, by 6% UK-wide in 2023, following a strong performance this year. But not all areas will perform in the same way. Markets less burdened by debt, with a higher proportion of cash purchasers, are expected to be better insulated, central London for example is forecast to see a 2.5% increase in prices next year.”
Jon Neale, head of UK research at JLL adds: “On the commercial side, the rise in base rates confirms market expectations, and supports the ongoing repricing which has seen yields move out by 50-125bps over the past few months.”
Hugo Davies, Chief Capital Officer at LendInvest: "As we emerge from a LDI (liability-driven investment) crisis triggered by the mini-budget, we find ourselves in the throes of a credibility crisis between fiscal and monetary policy.
"The MPC was backed into a corner today, with little option but to give what markets were demanding in the form of a 75bp rate hike. Their largest move in the current cycle though comes at a time when central banks (excluding the Fed) appear to be reformulating plans for a 'dovish pivot', as expectations shift to prepare for a more fraught recessionary period. We shouldn't see any abnormal activity in property or mortgage markets off the back of this decision, GILTs look stable, peak base rate continues its recent downward path, but sterling is currently going through a choppy ride."
Jeni Browne, director of BTL mortgage broker Mortgages for Business: "The 0.75% increase to the Base Rate today is the largest in 33 years. While this may seem overwhelming, unfortunately, it’s necessary to keep tackling inflation.
“For those landlords on tracker or variable rates that track the Base Rate, my best advice is to speak to a mortgage broker as soon as possible. You could save a lot on your mortgage payments by fixing into a deal now.
“What landlords and property investors need to remember is that SWAP rates influence mortgage pricing for market-funded lenders, which is good news for fixed rate products. Rishi Sunak and Jeremy Hunt’s appointments and subsequent actions have been met with approval by the money markets which has meant that SWAPS have started to ease down, so while the Base Rate rises, we are expecting fixed rates to come down slightly over the coming weeks.
“Really, we need clear guidance from the government on how the private rental sector will be supported through this economic crisis. Tenants and landlords are both struggling with rising costs, and more needs to be done to get people through the coming months."
Emma Hollingworth, Distribution Director at MPowered Mortgages: “Today’s decision by the Bank of England to raise interest rates accentuates the need for prospective buyers to seek professional advice in what continues to be a rapidly evolving market. As lenders further respond to the 0.75% rise, brokers need to be prepared to support buyers in finding what will work out to be the best deal for them in both the short and longer term.
“In the current environment, we at MPowered Mortgages are seeing rising demand for tracker products, as well as longer-term fixes, which lenders are responding to. The suitability of products will of course continue to depend on individual circumstances and a joined-up approach from those within the industry is needed when it comes to meeting homebuyers’ needs at this time.
“Facilitating the mortgage journey and making this as quick and seamless as possible remains vitally important. At MPowered Mortgages, we use AI and data-driven innovation to simplify and streamline this journey, supporting brokers in helping homebuyers complete their purchases at this time.”
Stuart Law, CEO of the Assetz Group: “We have been talking about the end of the buy-to-let era for some time, but today’s interest rate rise really does signal its final death knell, both as a viable sector for investors, or as a model that makes a useful contribution to our national housing mix.
“Even the most committed landlords will now be wondering how they will be able to fund their investments as buy to let mortgage costs soar on top of recent tax rises aimed at landlords. Other options do exist for keen property investors that work much better in the context of the current market conditions and policy environment. For example, investing in a portfolio of loans to housing developers means investors can receive typically 6% -9% gross yields as monthly loan interest, rather than pay a higher interest rate to a bank than the rental income for a buy-to-let mortgage. And this investment has a significant social impact, allowing more homes to be built for sale and rent at a time when we are facing a deepening national housing crisis.
“We must build more homes. It is the only way to tackle affordability and undersupply in the rental and for-sale markets. Finding new ways for private investors to successfully inject capital into the market is vital at a time when we look set for massive cuts in public spending. But we can’t ignore the other crucial aspect of this which is supply-side reform. That means unrooting the planning system to promote more development. However, once again whether this can be delivered by government is in doubt as we all await the autumn statement on Nov 17, with rumours swirling that the planning reforms promised by the last Prime Minister will be scrapped.”
Richard Pike, Phoebus Software chief sales and marketing officer: “Today’s increase may be the biggest single rise since 1989, but it was also the worst kept secret. It is, however, in line with The Fed, announced yesterday, and as such is a global trend that we are all learning to live with. Bringing inflation under control is difficult at the best of times, but when the price of oil and gas continues to rise and the war in Ukraine affects the movement of goods around the world, you have to ask if it is the only weapon in the Bank’s arsenal.
“Without knowing what will come out of the autumn statement the MPC are, to a degree, shooting in the dark and borrowers are taking the brunt of their decisions. Swap rates are dropping and lenders may have already factored in this latest rise in the base rate. However, this is not going to be the last increase and borrowers will certainly see their mortgage interest rates increasing over the next few months. The housing market is, I think, heading into a period of stagnation as we wait to see whether the current strategy has any effect on our rising inflation.”
Paul McGerrigan, CEO at fintech broker Loan.co.uk: "Another interest rate increase was inevitable as the MPC uses its limited range of tools to try to balance the books. Given that inflation is at a 40-year high, at least in the short-term action needed to be taken.
“This is going to impact homeowners with tracker mortgages, standard variable rates (SVRs), and those coming off fixed rates now and across the coming months. As we enter winter was the timing right for this move?
“These are tough calls. It could be a challenging couple of quarters, but UK Plc has proven to be robust and resilient in the past and will no doubt prove to be again. On paper, and based on recent events, the new Prime Minister and his team have more experience and depth in economics and fiscal policy, whether you agree with their politics or not. So let’s see what they come up with later this month."
CEO of RIFT Tax Refunds, Bradley Post: “Today’s decision will only add to the existing anxiety caused by the current cost of living crisis that has engulfed many households in recent months.
"As a result, those who are already stretched financially thin are now facing a further squeeze on their monthly earnings, as the cost of everything from our mortgage repayments, overdrafts loans and credit cards is set to climb.
"Unfortunately, there isn’t a great deal that can be done to ease these increased costs, other than tightening our belts where our borrowing habits are concerned.
"Of course, for the vast majority, the belt simply can’t get any tighter, whilst many more have no other choice but to utilise overdrafts and credit cards simply to get by from one month to the next.”
CEO of Alliance Fund, Iain Crawford: “The mere suggestion of a three per cent base rate will be unheard of for many homeowners who have only known interest rates to sit below one per cent until very recently.
"So they can be forgiven for feeling a tad dizzy at the prospect of what their mortgage is now likely to cost them, with the Bank of England not only implementing the largest single increase in over 33 years but also pushing the base rate to its highest since November 2008.
"Such a hike will also stun those who were currently in a position to buy but are now likely to find that the cost of borrowing is no longer as affordable as it was. This will not only dampen their enthusiasm within the sales market in terms of the price they are willing to pay for a property, but it’s likely to keep many exiled within the rental sector for quite some time more.
"So while the housing market may be in for a very rough ride over the coming months, it’s a safe bet that the rental market will be thriving.”
Director of Benham and Reeves, Marc von Grundherr: “Forget Halloween, it’s the Bank of England that has just delivered the fright of the year for the nation’s homebuyers with the biggest jump in interest rates in over three decades. Those on variable rate products can expect to see an immediate increase in their monthly payments, while those coming to the end of their fixed term can be suitably worried about what’s to come when they do remortgage.
"This latest increase will also do little to revitalise the declining level of buyers entering the market, with many now finding they simply can’t afford the cost of borrowing compared to just a few short months ago.”
CEO of Octane Capital, Jonathan Samuels: “While the mortgage market has settled in recent weeks, today’s latest base rate hike will certainly sow more seeds of panic amongst the nation’s homebuyers and who can blame them after witnessing the largest single increase since 1989.
"The average homebuyer opting for a variable rate mortgage can expect to see the cost of their monthly repayment increase by around £166 per month as a result of today’s increase.
"Those currently coming to the end of a three-year fixed mortgage will also see an increase as they look to secure another fixed term, with their monthly repayment increasing by an estimated £257 per month, despite having cleared a substantial chunk from their original loan.”
Managing Director of Barrows and Forrester, James Forrester: “The prolonged period of borrowing affordability that the nation’s homebuyers have basked in for some years is well and truly at an end. This latest, quite drastic hike, shows that the Bank of England have been asleep at the wheel for some time, awakening only now to the realisation that the economy is hurtling towards a sharp bend.
"While we anticipate that the base rate will fall again come next year, we can expect market conditions to dampen over the coming months as buyers no longer have the purchasing power to pay the hefty property price premiums of the pandemic market boom, while sellers will remain stubborn in their expectations and refuse to adjust their asking price.
"Whatever happens next, homebuyers need to wake up and smell the coffee, as high loan-to-value mortgages at low rates are now a thing of the past.”
Managing Director of HBB Solutions, Chris Hodgkinson: “We’ve already started to see the impact that a steady increase in interest rates has had in recent months, with chaos unfolding across the mortgage sector, while mortgage approvals have started to tumble, with house prices now following suit.
"Well you ain’t seen nothing yet and today’s mammoth base rate jump is sure to prove the final nail in the coffin of the pandemic property market boom.
"Buyers will now be treading with extreme caution and those looking to sell will find that they simply can’t secure the same price as they would have this time last year.”
Founding Director of Revolution Brokers, Almas Uddin: “Today’s increase may seem like a daunting one, but the good news is that the existing affordability criteria will ensure many borrowers are able to keep their heads above water.
"There may be times when the base rate and resulting cost of a mortgage exceed these stress test thresholds, but should this happen it is likely to be short-lived.
"In any case, lenders are keen to work with their customers and will avoid repossessions at all costs as it’s in everyone's interest to do so. Nobody wants to see an increase in forced sales that create misery and drag down the housing market even further.
"For those worried about the increased cost of their mortgage, talk to your lender and for those approaching the end of a fixed term, start these conversations at least six months before so your lender can get you onto the cheapest fixed rate available.”
Steve Seal, CEO, Bluestone Mortgages: “Today’s decision will be a tough pill to swallow for consumers and borrowers across the country as rates rise for the eighth consecutive month amid the ongoing cost of living crisis. We have already seen a dip in the number of mortgages in the past month as consumers across the country grapple with high-interest rates and the squeeze on their personal finances. Affordability challenges will no doubt continue to be the key issue for most people in the coming months.
“For those who are struggling due to the current challenging economic environment, it’s important to remember that hope is not lost and that there are options out there to suit their unique circumstances. Looking ahead, specialist lenders will continue to have a vital role to play in supporting those who do not fit the ‘vanilla’ criteria because of their financial circumstances. It’s the duty of our industry and at the core of what we do to remind these customers that there’s still hope for them to make their homeownership dreams a reality."
Mark Harris, chief executive of mortgage broker SPF Private Clients: "The market expected a 75 basis points increase, which could have been worse had the Liz Truss government prevailed. Swaps have eased by more than 100 basis points since the mini-Budget, so while 3 per cent may not be the peak for the base rate, we don’t believe it needs to or can go, much higher.
"With the money markets already pricing in their expectations, we are not expecting new fixed-rate mortgages to rise by an equivalent amount. Given how the markets reacted to recent political interventions, gilt yields and Swaps have fallen so fixed-rate mortgages could actually fall in the coming days and weeks. Lender appetite and competitiveness may also increase as activity falls, adding further impetus to recent rate reductions.
"There is a trend towards tracker or variable-rate mortgages with no early repayment charges. Borrowers are opting for these in the hope that fixes will settle at a lower level before they move over. If interest rates don’t rise as far as previously feared, variable rates will prove to be increasingly attractive.
"Those on trackers will see their mortgage payments rise by the full amount – someone with a £200,000 base rate tracker mortgage currently paying 3.25 per cent will see their monthly payments rise from £975 to £1,056. Those on variable rates are also likely to see an uptick in their monthly payments but the extent depends on their lender and how much of the rate rise it passes on via its standard variable rate. Thankfully, a very high percentage of borrowers have taken out fixed-rate mortgages over the past few years so no immediate impact will be felt."
David Reed, operations director at Richmond estate agency Antony Roberts: "First-time buyers, in particular, will be conscious of the impact a further rate rise on their mortgage payments. They may pause while they weigh up the feasibility of plans to buy before Christmas. They may even hold off until the Spring or Q2 and reassess the situation then.
"A preference to continue renting instead of buying will further restrict the supply of rental accommodation coming to market at a time when availability is already acute in many areas.
"The situation is very different for those buyers with a formal mortgage offer. For them, there is a rush to complete on a purchase before the bagged relatively attractive rate expires."
“Borrowers have big decisions to make, and they need help. The role of the mortgage broker and IFA has never been more important or needed.”
