Bank of England Holds Base Rate at 3.75% – What It Means for Your Mortgage

Today, the Bank of England's Monetary Policy Committee (MPC) voted unanimously to hold the base rate at 3.75%. The decision comes amid a significant shift in the economic backdrop that had been expected just weeks ago.

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Why Was a Cut Expected – and Why Didn't It Happen?

Before the United States and Israel started a war with Iran, a cut from 3.75% to 3.50% had been seen as a near certainty. However, the conflict caused an inflationary impact across the world, leading oil prices, swap rates, and mortgage prices to rise.

Consumer confidence fell to its lowest level since January 2025 during early March, according to S&P Global's Consumer Sentiment Index, with households most downbeat about their financial prospects since December 2024.

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What Has Happened to Mortgage Rates?

Mortgages under 4% have all but disappeared, with most major lenders raising borrowing costs. The average two-year fixed mortgage rate came in at 4.99% this week, up from 4.79% the previous week. The average five-year fixed deal rose to 5.05%, from 4.94%.

These figures are based on a 75% loan-to-value (LTV) mortgage, meaning buyers need a deposit of at least 25% of the purchase price.

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What Do Experts Say?

Rightmove mortgage expert Matt Smith said: "Today's decision to hold the Bank Rate was widely expected, and for most homeowners and homebuyers, there's no immediate change to worry about. For those looking to secure a new mortgage rate or coming up to remortgage, even small rises in rates can have a real impact on monthly budgets."

Sam Kirtikar, chief executive of The Mortgage Broker Group, noted: "We have seen plenty of rate switches in recent weeks, with many borrowers keen to secure something now in case lenders reprice again or withdraw deals at short notice."

Aaron Shinwell of Nottingham Building Society added: "Lenders have already begun adjusting mortgage rates in response to heightened market volatility. The longer-term outlook still points towards gradual easing once the global situation stabilises."

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What's the Outlook?

The Bank of England's next MPC meetings are scheduled for 30 April, 18 June, and 30 July 2026. Some experts predict interest rates may still be cut this year; others think they could rise. Much depends on how the Middle East conflict develops and its ongoing effect on oil and energy prices.

For homeowners coming to the end of a fixed-rate deal, the current climate makes it more important than ever to review your options promptly and seek independent mortgage advice before rates move further.

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Sources

• MoneySavingExpert
• Mortgage Strategy
• Yahoo Finance / Uswitch data
• HomeOwners Alliance
• Bank of England