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Steve Cox
Chief Commercial Officer
“A month ago, a Bank Base Rate (BBR) cut at this meeting looked almost certain, but the global picture has changed dramatically in a very short space of time. The war in Iran, the conflict in the Middle East and the wider instability it has created, particularly the sharp movements in oil prices, has understandably made the MPC far more cautious. Energy costs have a direct line into inflation expectations and, given the potential knock-on effects for the UK economy, it makes sense that the MPC has chosen to pause and give itself time to see how these events develop before taking the next step on rates.
“Unfortunately, the knock-on effect of this uncertainty has been felt quite sharply in the mortgage market, including in buy-to-let. We’ve seen something of a concertina effect in recent weeks, with product withdrawals and rates edging up as lenders have needed to respond to the sharp movements in funding costs. It’s been clear that no lender is immune from this. At the moment the path to further BBR cuts looks much narrower than it did at the start of the year, and the two or three cuts many were forecasting for 2026 now feels much less certain. That said, markets can move quickly. If there were to be a relatively swift de-escalation in the Middle East, the outlook could shift again, but right now it would take a very brave call to predict that outcome, and an even braver MPC to move ahead of the evidence.”