You are here: Home - News -

Bank of England closely monitoring mortgage lenders’ absorption of rate rises

  • 02/11/2018
  • 0
Bank of England closely monitoring mortgage lenders’ absorption of rate rises
The Bank of England (BoE) is not overly concerned yet about mortgage lenders not passing on rises in Bank Base Rate (BBR) to customers, however it is monitoring the situation “closely”.


In its quarterly inflation report the BoE acknowledged that banks had not been passing through the full 0.5% interest rate rises to borrowers and savers enacted over the last year.

This has meant many banks are seeing net interest margins fall and this could potentially impact on bank solvency.

When questioned about the report, the BoE’s Monetary Policy Committee (MPC) acknowledged that it was aware of the situation and monitoring it closely.

However, it did not feel the need to take action yet.


Pressure on margins

Sir Dave Ramsden, deputy governor markets and banking, said: “Generally across the deposit and lending side through this period of putting up BBR twice in the last year we’ve seen what we would broadly expect in terms of pass through.

“There are various pressures on banks’ net interest margins and we are monitoring that closely.

“But degree of pass through we’ve seen has been broadly as we expected.”

Ben Broadbent, deputy governor monetary policy, (pictured) echoed this and suggested the timing of intense mortgage market competition had affected the situation.

“At same time as we’ve had these two rate increases there has been more aggressive competition in the mortgage market and that has depressed some of these margins.

“I’d only say monetary policy operates in many more ways than just interest rates on new mortgages,” he added.


There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @robjupp: Great day yesterday for donations to @MortSleepOut. With Gift Aid, we are now close to £17,000. It would be great to get to £2…

Read previous post:
Mark Bullard NatWest Intermediary Solutions
NatWest hires two field BDMs

NatWest Intermediary Solutions has appointed Rhys Powell and Lawrence Barratt as field business development managers (BDMs).