As widely anticipated, in its continuing fight to bring inflation down to below 2%, the Bank of England yesterday raised Bank rate by one quarter of a percent to 5.25% and warned businesses and households that the cost of borrowing will remain high for at least the next two years. The last time the rate was at this level was April of 2008.

The property industry had plenty to say about it.

Jason Tebb, Chief Executive Officer, OnTheMarket.com:

“Although another base rate rise was widely expected as the Bank of England battles to reduce inflation to its 2 per cent target, there will be a sigh of relief that rate setters have opted for a 25 basis-point increase this time around, rather than the more aggressive 50 basis-point rise seen at the last meeting.

“Borrowers will hope that we are nearing the end of these rate rises as the 14th increase in as many meetings will further exacerbate increasingly stretched affordability and could impact the confidence of buyers relying on mortgages.

“Serious buyers and sellers continue to engage with each other but with the former having potentially even less purchasing power after today’s announcement, the sensible pricing of property coming to market is essential.”

Ben Beadle, Chief Executive, National Residential Landlords Association:

“Today’s rate rise will pile yet more pressure on to renters and landlords.

“The Bank of England has warned that the average increase in monthly repayments on buy-to-let mortgages by the end of 2025 will be around £275. This comes as some landlords have already seen their mortgage payments increase by almost 240% since December 2021.

“With landlord profits at their lowest level for 16 years, the vast majority are doing all they can to protect tenants from the impact of growing mortgage rates. However, without Government action, renters face a bleak future as growing costs lead to a loss of more rental homes from the market.

“Analysis for the NRLA has found that 735,000 rental properties could be lost across the UK if interest rates peaked at 5%. With an average of 20 requests to view each available home to rent already, today’s announcement will only worsen matters.”

Matt Smith, Rightmove’s mortgage expert:

“After a rollercoaster few weeks, the market position today is actually largely similar to six weeks ago, in that today’s rate increase was much anticipated by lenders and has been largely factored in already to mortgage rates, meaning we expect mortgage rates to continue their slow downward trajectory over the next few weeks.

“All eyes are now on July’s inflation figures in a couple of weeks – more positive news could accelerate rate drops, while any surprises would temper the current renewed market optimism.”

Emily Williams, director of research, Savills:

“We don’t expect this decision to have a significant impact on the mortgage market. Lenders began to price in further rate rises from early June, and swap rates have been falling since early July, even in anticipation of today’s rate rise.

“But, affordability remains a concern for many, and is weighing on both prices and activity. The number of mortgage approvals in June was still at just 85% of its pre-covid average, according to the Bank of England. This was accompanied by a fall in the number of sales agreed to 87% of their pre-covid average in June from 97% in May, according to TwentyCI, and points to the continued need for vendors to price realistically.

Matt Thompson, head of sales, Chestertons:

“We expect the rate rise to have a particular impact on homeowners with a variable mortgage as well as overleveraged buy to let investors whose increased mortgage payments could result in their investment making limited profit or a loss.”

Ben Quaintrell, managing director, My Property Box:

“It’s not unexpected but I know many won’t welcome this latest hike in interest rates, which I believe won’t be repeated this year. With inflation already starting to fall, I’m optimistic the economy is starting to reset with a return to normality.

“Thanks to the various levelling up initiatives and the additional investment this is attracting, the region is slightly sheltered from the worst effects. That’s reflected by our experience in the property market across the North East and North Yorkshire.”

Tom Bill, head of UK residential research, Knight Frank:

“It has been a bumpy ride back to normality for interest rates, with the previous government doing too much too quickly and the Bank of England arguably doing too little too late, but the last 14 years of ultra-low rates will increasingly be seen as the exception rather than the rule.

“Some lenders are cutting rates and as inflation continues to fall, sentiment in the housing market will improve. That said, downwards pressure on prices and transaction volumes will continue into next year as more people roll off fixed-rate deals and while the market is not on its knees, demand will remain subdued through to the next election.”

Richard Donnell, Executive Director of Research, Zoopla:

“For homeowners and would-be buyers who are impacted by mortgage rates, it’s important to note that the impact is not uniform across the UK. Higher mortgage rates hit harder in higher value markets in Southern England where a larger deposit and income are required to buy with a mortgage. In contrast, in the north of England and Scotland, house prices are still rising as the impact of higher mortgage rates is less pronounced. In certain areas in these regions, it’s also still cheaper to buy than rent at 5.5% mortgage rates.”