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"The Bank of England needs to release its chokehold on the base rate now"

ended 08. May 2024

Ahead of tomorrow's Bank of England interest rate decision, Newspage asked 15 financial services and mortgage experts whether the Bank of England should cut the base rate this week, and what they expect the decision to be.

One said: “The Bank of England needs to release its chokehold on the base rate now. It is suffocating the mortgage market and borrowers have struggled too much for too long.”

A second added: “That first rate cut needs to happen on the 9th May, not only for the financial welfare of the UK, but the mental wellbeing of its population.”

But a third said “the Bank's 'Table Mountain' approach, keeping base rate higher for longer while inflation remains above target, is the right approach and now is not the time for a first cut".

The views of 15 experts are below.

15 responses from the Newspage community

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Ben Perks
Managing Director at Orchard Financial Advisers
The Bank of England needs to release its chokehold on the base rate now. It is suffocating the mortgage market and borrowers have struggled too much for too long. A reduction in the base rate would be the catalyst that kickstarts the property market by injecting much needed confidence. Unfortunately, I don't think the Monetary Policy Committee have the bottle to make cuts before the Europeans and Americans, so it is likely that borrowers will have to struggle on for the foreseeable. Another opportunity will be missed.
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
The only thing that will boost confidence in the currently turbulent mortgage and property market is for the Bank of England to make a bold move and drop rates. Threadneedle Street has an opportunity to get ahead of the curve for once but I don’t think a cut is likely until the end of the Summer. In the meantime, the property market will continue to stutter and borrowers will continue to feel the pain.
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Justin Moy
Managing Director at EHF Mortgages
The Bank of England needs to act immediately and cut the base rate by up to 0.5% to support both businesses and mortgage borrowers and inject renewed confidence into a flagging economy. Realistically, though, I see us holding rates throughout the Summer. That's an easy cop-out and will likely be accompanied by plenty of finger pointing around the world as an excuse. Brexit was suppose to mean greater control of our own finances, but at the moment we are frightened of our own shadow, an isolated figure between the heavyweights of Europe and the US.
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Graham Wells
Founder and Financial Coach at GroWiser Financial Coaching
My gut feeling is that the base rate should be cut this week, but I don't think it will. A small nudge down to 5% would provide some relief to borrowers and help acknowledge that inflation is heading in the right direction. But the Bank of England isn't known for being 'ahead of the curve' with its decisions based upon statistical evidence rather than foresight and intuition. I'd love to be proven wrong.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
There is no chance the Bank of England will cut rates this summer. Their decisions have confirmed that they are not forward looking and will only respond once inflation is below target. This means there will only be one cut this year, and that’s bad news for the UK businesses, households and the broader economy.
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Mike Staton
Director at Staton Mortgages
Absolutely, the current UK household is in serious need of resuscitation. After 2 years of being on the back of a financial hammering at every opportunity, we can see a clear chance to give homeowners a break from what feels like the Bank of England's tyranny over homeowners and give them the breathing space to allow them to live their first normal summer with their heads above water. That first rate cut needs to happen on the 9th May, not only for the financial welfare of the UK, but the mental wellbeing of its population.
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Dariusz Karpowicz
Director at Albion Financial Advice
It's highly unlikely we'll see a rate cut from the Bank of England this week. The overall economic backdrop, coupled with rising swap rates, suggests the Monetary Policy Committee is more likely to hold rates steady. Unfortunately, this means the protracted financial pressure many households are under is set to continue for now.
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Chris Barry
Director at Thomas Legal
The BoE is very unlikely to change interest rates on Thursday. The economy is too shaky to increase rates and the data with lagging indicators are not proving enough decline to push through a reduction in rates.

Lenders anticipate higher central bank rates for longer hence the recent increase to mortgage rates, and although mortgage demand dropped in recent weeks, there is still fairly high demand.

Interest rate reduction are likely to commence towards the end of this year providing all other economic factors continue on their current trend.

Slow progress!
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Michelle Lawson
Director at Lawson Financial
What the Bank should do and what they will do are two entirely different things. The economy really needs some positivity and an injection of confidence so a cut would be perfect, but with the US Federal Reserve holding steady we are likely to do the same. If there is a further reduction in inflation in official UK data published this month, that may boost the chances of a June decrease in Bank Rate.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Predicting the base rate at this point is akin to gambling on the horses. Everyone wants a rate reduction, everyone expects one to happen but the members of the Monetary Policy Committee are perched so high up in their ivory towers that they can't see the damage the MPC is doing to the economy by delaying the rate reduction. Come on! Give us a rate reduction. Even the PM will cheer you at this rate (no pun intended!).
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Akhil Mair
Director at Our Mortgage Broker
In response to the upcoming Bank of England rate decision, the phrase 'coulda, shoulda, woulda' springs to mind, as I anticipate yet another hold on the base rate. There seems to be no substantial expectation for the BOE to reduce rates until at least January 2025, in my opinion. This conservative approach reflects ongoing economic assessments and prevailing uncertainties that likely discourage any immediate changes to the base rate this week.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
The Bank of England should, of course, cut the base rate to ease the pressures on mortgage borrowers and households. However, sadly, Andrew Bailey and his cohorts' focus on combating inflation seems to overshadow every other consideration and economic measurement. Accordingly, the chance of a rate reduction this week is as likely as Humza Yousaf, Lorna Slater, or Patrick Harvie winning Scottish politician of the year.
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Rob Gill
Managing Director at Altura Mortgage Finance
It's been the case for a while now that the Bank of England's credibility in its fight against inflation is more important for mortgage rates than the actual base rate. Their 'Table Mountain' approach, keeping base rate higher for longer while inflation remains above target, is the right approach and now is not the time for a first cut.
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Amit Patel
Adviser at Trinity Finance
The MPC have only one job to do this Thursday and that is to vote for a long overdue rate reduction in the base rate. However, I think Rishi Sunak will call a general election before the MPC decide to vote for a rate reduction.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
As economic uncertainties loom and whispers of a potential downturn grow louder, the Bank of England finds itself at a crucial crossroads. Amidst reports of a significant decline in trade activities from various sectors, the clamour for a swift and decisive action to stimulate economic growth has intensified.
I have spoken to numerous tradespeople who have expressed grave concerns over the alarming drop in work opportunities. The ramifications of this decline in trade activities are not confined to the tradespeople alone but extend to ripple effects across the broader economy, affecting employment rates, consumer spending, and overall economic stability. In such circumstances, it becomes imperative for the Bank of England to consider proactive measures and reduce interest rates now.