Industry reacts as interest rates climb

CEO of Octane Capital, Jonathan Samuels, commented:

“Whilst an unpopular opinion, it could be argued that the Bank of England hasn’t been daring enough in their decision to increase rates again today and really another 0.5% increase was needed in order to tame inflation.

It’s far better to have a short period of pain brought about by higher interest rates, rather than a sustained period of significant economic turmoil and uncertainty.

Take America, for example, where rates started to rise at a similar time to the UK, but in a far more aggressive manner. Inflation there is already back to 3% and so the target of 2% is within reach. If we had been as bold, then we too would be close to achieving the much heralded ‘soft landing’ and would be far closer to interest rates falling than we are now.”

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

“A fourteenth consecutive base rate hike will come as yet another nail in the coffin for the nation’s borrowers and will do little to boost a property market that has been treading water in recent months.

We have seen some positive signs in recent weeks with mortgage approvals climbing. However, while this boost in market activity is good news, higher interest rates are likely to stifle the purchasing power of the nation’s buyers even more, resulting in the further stagnation of house prices.”

Managing Director of Barrows and Forrester, James Forrester, commented:
“The nation’s borrowers will be forgiven for feeling like they are trapped in some sort of Bank of England Groundhog Day, with rates increasing for the fourteenth consecutive time today.

The base rate is now the highest seen in over fifteen years and so the latest generation of buyers will no doubt be panicked by the steep cost of borrowing they face in the current market.

The silver lining is that a lower rate of increase suggests that we could be nearing the peak and while we expect to see lucky number fifteen materialise, they could well plateau before the year is out.”

Managing Director of House Buyer Bureau, Chris Hodgkinson, commented:

“Despite interest rates increasing consistently over such a sustained period of time, the property market is yet to topple.

However, while it has remained largely impervious where property values are concerned, there is a growing undercurrent of instability forming beneath the surface. This is taking the form of less buyer activity, longer transaction times and, ultimately, a higher chance of transactions collapsing before they reach the finish line.

So while sales are still completing and for a fair price, sellers can expect a far more turbulent time making it through to completion.”

CEO of RIFT Tax Refunds, Bradley Post, commented:

“The Bank of England’s ‘aggressive’ approach to managing inflation via interest rates has, to date, been pretty abysmal. It’s fair to say that they haven’t acted swiftly enough, or with the required level of intent to actually curb inflation, which remains extremely high.

At the same time, fifteen consecutive base rate hikes have had a serious impact on the average household, who are now not only dealing with a sustained increase in the cost of living, but are also paying the price when borrowing to make ends meet.”