The Bank of England has kept interest rates on hold at 4% and signalled a slower pace of bond sales warning that the UK economy remains vulnerable to inflationary pressures.
The Monetary Policy Committee voted 7–2 to maintain the base rate, in line with market expectations. The central bank also announced it would scale back the pace of quantitative tightening, reducing the planned disposal of government bonds to £70 billion from £100 billion.
Governor Andrew Bailey said the economy was “not out of the woods yet”, pointing to subdued growth, flatlining GDP in July and unemployment at a four-year high.
The Bank highlighted ongoing geopolitical risks, including global conflicts and new US trade tariffs, as further headwinds.
Inflation is forecast to remain at 4% in September, driven by rising food costs and higher employment expenses linked to Chancellor Rachel Reeves’ £25 billion national insurance increase for businesses set out in October’s Budget.
Markets had widely expected rates to be left unchanged following five consecutive cuts since last August. Investors now anticipate borrowing costs will remain at 4% for the rest of the year, with policy direction hinging on Reeves’ tax and spending plans due in November.
INFLATION CONCERNS
Colin Bell, COO at Perenna said: “The Bank of England’s decision to maintain the interest rate at 4% reflects persistent concerns about UK inflation, which remains above target with consumer prices rising yet again.
“It makes any likelihood of mortgage rates dropping this side of Christmas extremely slim, with thousands of borrowers facing a sharp reset in repayments as they remortgage, potentially adding hundreds of pounds to monthly outgoings.”
HARSH REALITY
And he added: “This will be a harsh reality for households already stretched by higher living costs. The ripple effect could be profound – affordability could worsen despite measures recently introduced to improve stress testing and hopeful first-time buyers are priced out or forced to delay purchases, creating a subdued market cycle that in turn reduces transactional activity.
“We have to move away from short-termism if we are ever going to shield the market from such uncertainty.”
RISK EXPOSURE
Rob Clifford, chief executive of Stonebridge, said: “The spectre of 2022, when prices spiralled, still looms large for the Monetary Policy Committee – and it is clear it is determined not to repeat exposure to that risk, even though some regard it as remote.
“That means it could be some time before we see borrowing costs fall again. Markets now put the odds of a cut this year at just one in three, with the next quarter-point reduction not expected until spring 2026.”
He added: “For advisers, today’s decision is another prompt to not only engage early with customers coming up to refinance but to reengage with those who may have opted to wait – after all, only 61% of eligible borrowers who could refinance in H1 did. They will all need clear guidance to weigh the different products on offer and secure the deal that best fits their circumstances.”
MISSED OPPORTUNITY
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “There was a very slim chance that the Bank of England would cut interest rates this month but ongoing concerns over inflation, which remains steady at 3.8 per cent, meant caution prevailed.
“With inflation expected to rise to over 4% at the next reading, double the Bank’s 2%, the chance of a cut at the next meeting in November is also looking less likely, especially as only two members of the Committee voted for a quarter-point cut this time around.
“With speculation surrounding what property taxes might be introduced in the November budget resulting in discretionary buyers and sellers taking a ‘wait and see’ approach, a rate cut would have been a shot in the arm for the housing market.
“Now that the stamp duty concession has ended, and with affordability concerns persisting despite five rate reductions in the past year, further rate reductions are necessary to boost not only the housing market but the wider economy.”
ALL ABOUT THE BUDGET
Richard Pike, chief marketing and sales officer at Phoebus, added: “While inflation was not quite as high as some anticipated yesterday, it remains above target and continues to weigh on households and businesses.
“Against that backdrop, it’s little surprise the Bank has held its line and the market has largely priced in today’s decision.
“The bigger question now is whether we will see another cut before the end of the year.
“That prospect will rest heavily on the signals coming out of November’s Budget, which could determine how quickly confidence returns to both households and industry.”
INDUSTRY REACTION
Stephanie Daley, director of partnerships at Alexander Hall, said: “Today’s hold to the base rate was widely anticipated and this has already been reflected by many lenders with respect to their current product offering.
“The good news is that previous rate cuts have already brought about a greater degree of confidence amongst lenders and buyers and, as a result, we’ve seen a greater range of mortgage products introduced in recent months to help drive market activity – from lower deposit offerings to higher loan to income multiples.
“So whilst a hold might not be the decision many wanted to see, the market remains in a very good position going into the last quarter of the year.”
COULD HAVE GONE UP
Jonathan Samuels, CEO of Octane Capital, said: “A hold on the base rate was widely expected and while many homeowners and buyers may be disappointed not to see a cut, the reality is that it could easily have gone the other way.
“With inflation stuck at 3.8% and still some way off the Bank of England’s 2% target, wage growth now slowing, and GDP growth flat, the economy remains in a state of limbo.
“This has been a recurring theme for some time and it could be argued that had the Bank of England taken a more bullish approach to curbing inflation earlier, greater progress may have been made by now.
“Instead, we find ourselves treading water and whilst the property market is standing firm, any notable momentum is unlikely to materialise until we see stronger signals of sustained economic recovery.
NEAR THE CYCLE PEAK
Simon Gammon, managing partner at Knight Frank Finance, said: “The Bank of England’s decision to hold the base rate at 4% today comes amid growing consensus that we’re at, or near, the peak of this cycle.
“Markets have all but ruled out further rate reductions before the end of the year. HSBC and Deutsche Bank have pushed back their forecasts for the next cut, citing persistent inflation and economic uncertainty.
“Inflation remains stuck at 3.8%, well above the Bank’s 2% target, meaning the MPC is rightly cautious. Having already trimmed rates in August, it appears the Committee is waiting for more convincing evidence that inflation is easing consistently before moving again.
“In terms of mortgages, that suggests fixed-rate products may see less downward pressure than many hoped. Lenders will likely stay cautious, pricing in the risk that rates might stay higher for longer. Variable-rate borrowers may see little immediate change, with stability rather than relief the likely theme for the months ahead.”
BROKERS NEED TO BE READY
Claire Van der Zant, CEO of Novus Strategy, said: “The Bank of England may be drip-feeding rate cuts into the mortgage market but activity is primed for a rebound.
“Transactions haven’t been over 100,000 in a single month since September 2021 and yet between 2013 and 2019 they were regularly at or approaching this level, crossing this boundary seven times.
“With money markets pricing in two more rate cuts by the end of next year and affordability measures easing back, the market could return to similar volumes relatively soon as buyers start reacting to a more favourable rate environment.
“If that proves correct, then lenders, brokers, agents and conveyancers need to be ready for more transactions. While that’s great news for everyone, lenders are going to have to be careful because they find it harder to make money the lower interest rates go.”
NAILED ON
Matt Smith, Rightmove’s mortgage expert, said: “A Base Rate hold today had looked fairly nailed on, especially after yesterday’s news that inflation remains stuck at 3.8%.
“The later-than-usual Budget is very much on the horizon, and the markets are having to wait until the end of November for answers to the questions that are driving a lot of the current uncertainty. So, it’s not surprising we’ve seen market expectations for the next Base Rate cut shift from late 2025, into early 2026.
“We’ve seen average rates drift up recently, and with today’s decision unlikely to relieve the pressure lenders are feeling, we could see rates continue to rise in the coming weeks.
“This time last year, we saw a jump in activity as the Bank cut the Base Rate for the first time in four years. Our data shows that sales agreed are currently +3% higher than they were during this busy period, signalling that, for now, mortgage rate increases are not putting off those looking to move home.”
HOLDING STEADY
Daniel Austin, CEO and co-founder at ASK Partners, said: “With global volatility high and domestic policy still in flux, the MPC is holding steady.
“Markets are still pricing in a cut before year-end, but with the Autumn Budget looming and an uncertain economic background, policymakers are unlikely to move until fiscal plans are clearer.
“For homeowners and buyers, the hope of lower borrowing costs lingers, yet persistently elevated fixed mortgage rates mean relief is not imminent. With inflation unlikely to return to the 2% target this year, mortgage pressures look set to persist. Investors and developers will also be watching closely.
“Resilient sectors such as co-living, build-to-rent and storage continue to attract capital thanks to tight supply and strong demand, but a stable downward inflation trend is critical to unlocking broader activity. Should the predicted BoE cuts arrive, they could act as a spark, but for now, only the most agile investors may find opportunities in a cooling market.”
DELICATE BALANCING ACT
Adam Ruddle, chief investment officer at LV=, said: “We expected the Bank of England to maintain the Bank rate at 4%, given the persistence of stronger inflation figures and the uncertainty surrounding the upcoming Autumn Budget.
“The Bank faced a delicate balancing act. On one hand, cooling employment data could justify a rate reduction, yet on the other, inflation remains stubbornly high. Consumer prices have risen by 3.8%, matching July’s pace and marking an 18-month high. While services inflation is beginning to ease, it remains elevated at 4.7%.
“In light of these inflationary pressures, it is likely the Bank will pause the rate cutting cycle, with market expectations currently pointing towards only one rate cut in 2026. This will come as disappointing news for many mortgage holders who had hoped for further reductions over the next 12 months.”
MIXED PICTURE
Lee Williams, national sales manager at Saffron for Intermediaries, said: “Today’s decision to hold the base rate reflects continued caution as the Bank of England looks to balance stubborn inflation with wider economic uncertainty.
“For borrowers, the picture remains mixed. Some lenders have raised mortgage rates ahead of the Autumn Budget, while others are cautiously easing lending rules and criteria, a shift that is helping affordability for those hoping to step onto the property ladder.”
“Against this backdrop, expert advice is crucial for anyone considering their homeownership options.”
NO SURPRISES
Nick Hale, CEO of Movera, said: “This move was expected by the MPC, despite yesterday’s news that inflation did not hit 4% as forecast. With ONS data also confirming this week that the jobs market has continued to cool, a further base rate cut would be beneficial in November.
“But only time will tell whether the Autumn Budget is likely to impact spending habits and derail the Bank of England’s inflation projection – pushing the prospect of another cut back into 2026.
“In the meantime, for brokers and conveyancers, it’s important that transactions keep moving. Clients will be looking for clarity on whether now is the right time to move or remortgage.
“A hold provides a period of stability – some breathing space for brokers to prioritise building client relationships and providing that much needed advice and guidance.
“Likewise for conveyancers, now is the time to focus on making headway with transactions and streamline your key processes. As if inflation turns in the coming months and the base rate falls with it, efficiency will be the only way to stay afloat in a buoyant market.”
OUTLOOK HAS SOFTENED
Steve Cox, chief commercial officer at Fleet Mortgages, said: “The Bank of England’s decision to hold Bank Base Rate at 4% today comes as little surprise, but it should probably mark a shift in expectations for what might happen in the months ahead.
“With inflation projected to edge up in the short term and economic growth continuing to be conspicuous by its absence, it’s understandable why the MPC is taking a cautious stance now and is likely to do so for a number of months to come.
“While markets had previously priced in multiple rate cuts this year and next, that outlook has definitely softened. Economic headwinds – both domestic and global – mean the path to lower rates is likely to be slower and more uncertain than previously hoped.
“That said, it’s important to stress that in the buy-to-let market, we don’t need a base rate cut to deliver more competitive pricing.
“Lenders who are less reliant on the money markets for funding have more flexibility to respond quickly and that’s exactly what we’re doing. It means advisers can still offer strong value to landlord clients, especially those remortgaging or seeking to expand portfolios, even in a static Bank Base Rate environment.
“Plus, the closer we get to the end of the year, the greater likelihood large numbers of lenders will be pricing in order to fill up early 2026 pipelines, which of course can present a number of opportunities to advisers with all types of borrower clients.”
MORE CORRECTION THAN CHANGE
John Phillips, CEO of Just Mortgages and Spicerhaart, said: “Even with the shock news on inflation yesterday, a hold on the base rate comes as no surprise.
“We know the central bank prefers its careful, gradual approach to monetary policy and with a cut last month, stubborn inflation and fierce headwinds at home and abroad, they are not likely to deviate just yet. Whether this leads instead to a November cut is still too early to call – while the economy is stagnating and needs an urgent boost, we just don’t know yet if inflation has peaked and what impact the upcoming Autumn Budget will have.
“This week’s news is more likely to deliver a correction, rather than a dramatic change in mortgage rates – with swap rates creeping up recently. The encouraging thing for us that in the main, buyers and sellers don’t seem to be holding off on their plans with good business levels across both estate agency and financial services.
“While the picture ahead is still unclear, brokers are continuing to deliver real value to clients in navigating the market today – exploring options, nurturing confidence and providing a five-star service.”
BUDGET CONCERN
Charles Resnick, CFO at Afin Bank, said: “After last month’s history making re-vote, today’s meeting was always expected to be less dramatic, so no change in the base rate is no surprise. However, there was a lot for the MPC to chew over today, not least a 3.8% rate of inflation that is still above the Bank’s target of 2%.
“The market is pricing in one more rate increase before the end of the year, expected to be in November. At that point the MPC will also have to factor in how the Budget, as well as possible tax rises, will impact the economy’s near-term growth prospects.
“For now, borrowers can expect to see their mortgage interest rates remain at current levels, while savers might consider taking advantage of some of the higher longer-term fixed rates on offer to make the most of their money before the base rate drops again.”
CAUTIOUS APPROACH
Ben Thompson, deputy CEO, Mortgage Advice Bureau, said: “The Bank of England’s decision to hold the base rate at 4% comes as no surprise, aligning with its recent commitment to taking a gradual and cautious approach to future rate cuts.
“While another cut before the end of the year isn’t off the table, the Monetary Policy Committee’s primary focus remains on getting inflation firmly under control.
“As always, bigger picture thinking is essential. Despite the current stability in interest rates and a wealth of innovative mortgage options, our research indicates that 27% of renters still feel homeownership is a pipedream. “
MAYBE NOVEMBER
Matt Harrison, customer success director at Finova Broker, said: “A further base rate cut today was always unlikely, but inflation tracking below the Bank of England’s forecast could indicate a potential cut in November.
“However, with no guarantee, brokers with clients erring on the side of caution will need to manage expectations carefully. With other factors like the Autumn Budget in the mix, those waiting for an interest rate cut could end up waiting well into the new year.
“Communicating regularly with your clients will be the key to affirming your position as a trusted adviser. Ensuring you have the tools in place to streamline processes and free up your time to give the client your focus is the challenge.”
CONTINUED VIGILANCE
Gareth Lewis, deputy CEO of MT Finance, said: “Today’s decision to maintain interest rates at 4% comes as no surprise.
“By holding rates, the Monetary Policy Committee is demonstrating its commitment to continued vigilance with regard to inflationary pressures while providing a sense of stability for businesses and investors.
“For property investors, this decision may create a stronger demand for alternative financing solutions such as bridging loans. A measured approach is key, and we anticipate that a rate reduction is on the horizon as inflationary pressures continue to ease.”
INVESTORS NEED CERTAINTY
Tim Parkes, CEO of RAW Capital Partners, said: “A hold was almost guaranteed today, but it will still come as a disappointment to many borrowers. With inflation flat in August and economic growth faltering, a quiet sense of uncertainty has settled over the market in recent weeks.
“While holding the base rate may have been the only realistic option on this occasion, the time is coming for the Bank to be bolder in both its decision making and its signposting.
“Many property buyers will be hesitant in executing their plans without greater clarity about where interest rates are headed, especially with the potentially challenging Autumn Budget on the horizon.
“For the past two years, we’ve been told that borrowing costs would fall, only for a few months of stubborn inflation to force the central bank back into a more cautious stance. What investors need is certainty – whether more significant rate cuts are on their way or not.
“A rate cut at next month’s meeting looks more likely, but until then onus is on lenders to provide the stability and certainty the market is crying out for.”
WE NEED CLARITY NOW
Paresh Raja, CEO of Market Financial Solutions, said: “At the start of the year, the commonly held view was that the Bank of England would cut the base rate four times in 2025. So far, there have been three cuts, so although there will be some frustration among homebuyers and property investors that there was not a further reduction today, it’s important we see the bigger picture.
“A fourth cut for the year may well come when the MPC meets again on 6 November, and either way, the base rate has come down 1% in the past year or so.
“We are seeing a greater sense of stability in the property and mortgage markets, with rates heading in the right direction and house prices continuing to grow at a steady pace. That said, irrespective of what interest rates do, the Autumn Budget is looming large overhead.
“There’s so much speculation about tax changes, and particularly reforms to how property purchases (or property ownership) are taxed, that buyers and sellers alike are going to feel unsettled. We cannot wait until the Chancellor’s speech on 26 November to gain clarity on this; the sooner the Government can start to communicate its planned reforms, the better for everyone.”
HIGHER FOR LONGER
Neal Moy, MD of Development Finance at Paragon Bank, said: “By holding rates, the Bank of England has reinforced the ‘higher for longer’ stance, indicating continued caution around stubborn inflation.
“Whilst mortgage affordability has improved recently – six months ago, average mortgage rates for a 2-year fixed deal were around 4.88%, versus 4.52% today – the housing market remains subdued and a further reduction in borrowing costs would enable more fluidity in the sector, as well as improved confidence for buyers.
“In development finance, we’re seeing a mixed picture – while some developers are pressing ahead, others remain more cautious. The future path is towards lower rates, but it seems it will be reached more slowly than anticipated.”
SPACE TO PLAN
Simon Webb, managing director of capital markets and finance at LiveMore, said: “The MPC’s decision to hold the base rate at 4% has been widely expected as the Bank juggles persistently high inflation and weak growth. While borrowers will always welcome cuts, this stability gives lenders and intermediaries the space to plan with greater confidence.
“All eyes will now be on November’s Budget and the impact that might have on the housing market and the potential for further rate cuts before the end of the year. Later life lending is set for continued growth. Increasing demand and awareness create clear opportunities to help older borrowers with solutions designed to meet their individual needs.”
THOUSANDS COULD DEALY REMORTGAGING
Joe Pepper, UK Chief Executive Officer at PEXA, says: :“The chances of a rate cut happening today were almost non-existent, and with inflation remaining sticky and consumer prices rising, we now expect no cuts until 2026.
“Even if we did get one, it would have negligible positive impact on borrowing costs since it would have already been priced in by lenders.
“Aside from those who have no choice, we would now expect to see thousands of borrowers delay remortgaging until rates drop next year. When this does happen, the flood gates will open. There will be an enormous, almost unmanageable surge in demand for the cheapest rates.
“As always, the market will simply expect conveyancers to make do, but the truth is their capacity is already maxed out, and the lack of good infrastructure in place to help them will leave them floundering despite their best efforts to deliver for their clients.
“We must change this urgently by speeding up the digitisation of the process, freeing up conveyancers to focus on both remortgage and purchase transactions that need their expertise. Implementing the technology that creates certainty in the process is vital if we’re going to effectively navigate the challenges ahead.”
BIGGEST IMPACT ON WORKING PEOPLE
Mel Spencer, growth director of outsourcer Target Group, said: “The Bank of England is in no rush to lower the bank rate. Prices in the UK are rising at the fastest rate in the G7.
“But with food and alcohol prices up 5.1%, the biggest impact is on working people who spend more of their income on groceries. All the while service sector inflation and wage bills are edging down as the labour market cools.
“But I don’t think Governor Andrew Bailey is feeling very courageous – he’s not about to lower rates. So if Chancellor Rachel Reeves doesn’t do something to help working people soon – by removing VAT from power bills maybe – we will soon start to see mortgage arrears rise.
“Lenders should be prepared and invest in their collections systems. They need to fix the roof while the sun is shining.”
IT WAS THE THE ONLY OPTION
Alpa Bhakta, CEO of Butterfield Mortgages Limited, said: “A rate hold may not be welcomed by the Prime Central London (PCL) market, but it was really the only option available to the Bank of England on this occasion. With inflation pushing higher, a consecutive rate cut risked entrenching price rises.
“Analysts now expect one further rate cut this year, so this pause should be seen as a chance for the lending market to take stock and ensure that offerings reflect wider conditions.
“Lenders must also remain committed to providing brokers and investors with the tailored support and transparency they’ll need to act with confidence in the coming weeks.”
BROKER OPPORTUNITY
Martin Sims, Molo distribution director, said: “The Bank of England’s decision to hold the base rate brings some welcome stability to this challenging market.
“Whilst borrowing costs today remain unaltered, this ‘pause’ gives investors time to plan and creates room for lenders to review and refine their propositions.
“Brokers have the opportunity to be proactive, when connecting with landlord clients, to review portfolios, and ensure current products remain appropriate.
“This is welcomed, over merely administering reoffers to reflect changing rates. Remortgaging activity and necessity remain high, therefore today’s decision underlines not only the importance of timely advice but also adds focus to the opportunities for brokers to add real value in guiding landlords through these complex market conditions.”
