Bank of England raises interest rates to 4.5%

The Bank of England raised interest rates by 0.25 percentage points from 4.25 to 4.5 per cent at its May meeting, the 12th consecutive increase. Seven members of the nine-strong Monetary Policy Committee (MPC) voted for a 25 basis-point rise, with two voting to maintain base rate at 4.25 per cent.

Considering recent events in the global financial markets, this latest rate rise was not unexpected. While a reduction in base rate would have been welcome news, it feels as though another increase is necessary at this moment in time to combat stubbornly high inflation and help bring back some much-needed stability. Indeed, while inflation fell in March, it did not drop by as much as forecast, with consumer price inflation (CPI) falling to 10.1 per cent, and still well above the Bank’s 2 per cent target.

Hopefully, this will be the last rise before we start to see a plateau in rates, although the Bank also warned that inflation would be higher this year than previously anticipated, as it was surprised at the rate at which food prices are rising, making inflation stickier this year and next.  Subsequently, the Bank forecasts inflation of around 5 per cent at the end of this year, compared with the 4 per cent previously forecast. However, there was some good news with the Bank saying that there would be no recession this year as it upgraded its economic growth forecasts by more than in any of its previous reports.


house prices dip but transaction numbers improve

House price growth dipped in April, according to Halifax, meaning the current average house price is £7,000 less than last summer’s peak at £286,896, although still some £28,000 higher than two summers ago. While the rampant price growth seen during the pandemic is a thing of the past, this is better for the overall health of the housing market with mortgage approval numbers picking up accordingly. This suggests more confidence from buyers as mortgage rates stabilise, while sellers are either pricing more realistically or accepting lower offers.

There is clear evidence that the sentiment of buyers and sellers is shifting – with a more stable interest rate environment and inflation slowly falling, buyers are coming to the realisation of the new world of higher costs, factoring these in and making the leap assuming they can afford to do so.

Going forward, some encouragement is needed from the government in both the sales and rental markets. We would like to see some shift on stamp duty for both homebuyers and buy-to-let investors as this would help stimulate the market and improve those all-important transaction numbers.


how MT Finance can help

If you need to move quickly to secure your purchase, MT Finance can assist. Our bridging loans are available for up to two years, with no monthly payments, if preferred, helping landlords and investors with budgeting in a rising interest rate environment. This provides maximum flexibility to get through a more challenging, short-term environment before moving onto a longer-term product once the market has settled down.

With no early repayment charges, there are no financial penalties if your circumstances change and you need to get out ahead of plan. To contact the team, call us on 0203 051 2331, online or via

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