BoE rate freeze: Industry reacts
Industry reactions to the Bank of England’s decision to freeze interest rates have been mixed, with some welcoming the “new normal” while others fear the central bank has fallen “asleep at the wheel”.
The Bank of England today held the base rate at 5.25 per cent after 14 consecutive increases.
The decision came after data earlier this week showed a sharp fall in core inflation last month.
“Today’s Bank of England decision is positive and indicates that interest rates will begin to stabilise over the coming months,” said Duncan Kreeger, chief executive and founder of property investment platform TAB.
Read more: P2P will benefit from peak in interest rates
“It is time to adapt to the new normal and boost industry growth in changing market conditions.
“The new normal demands greater creativity from finance providers to keep projects going amidst labour shortages, evolving regulations, and rising costs. It’s our responsibility to make our loans and mortgages as economically viable as possible, ensuring the industry has the necessary funds to continue its growth.”
However, Jason Ferrando, chief executive of peer-to-peer property lending platform easyMoney, was less effusive about the Bank’s decision.
“Yet another base rate increase may have been viewed as overkill due to the fact that inflation has started to ease in recent months, but it’s fair to say that the job is far from done and so many will argue that a freeze perhaps wasn’t the right path to take today,” he said.
Read more: Shojin chief says diversification is key while rates and inflation remain unpredictable
“We’re yet to see prices actually fall and it’s simply the speed of increase that has reduced. So it would be a shame for the Bank of England to fall asleep at the wheel now, just as they were starting to make some progress.”
Deposit account rates have risen over the past year, albeit at a slower pace than borrowing rates, but savers should not necessarily expect this to continue, according to Myron Jobson, senior personal finance analyst at Interactive Investor.
“Savers might not experience another uptick in the interest applied to cash stashed in savings – although some banks and building societies might not be done with passing on previous rate rises, having been slow off the mark to do so,” he said.
“Those who can afford to put money away for at least five years or more should consider investing for the potential of long-term inflation-beating returns that far outstrip savings rates.”
A number of P2P lending platforms have been raising their target returns this year in order to compete with higher savings rates.
Unbolted, easyMoney, Folk2Folk, Loanpad and CrowdProperty are among the firms to have increased their rates to attract investors.