The Bank of England (BoE) has held the Base Rate at 4% in its latest announcement. This decision comes after a 0.25% cut in August, as policymakers continue to weigh up how best to control inflation while supporting economic growth.
Inflation remains stubborn at 3.8%, unchanged from the previous month and still well above the Bank’s 2% target. Although this is far lower than the double-digit highs of 2022, it keeps pressure on the BoE to tread carefully when deciding on future cuts. Current forecasts suggest the Base Rate may not be reduced again until early 2026, though this could shift if global or domestic economic conditions change.
What’s Happening with Mortgage Rates?
Over the past year, the mortgage market has seen notable movement:
- 2-year fixed rates are now cheaper than 5-year deals, reversing the pattern we saw in 2023.
- The average 2-year fixed rate has dropped from 6.61% (July 2023) to 4.53% today.
- The average 5-year fixed rate has fallen from 6.08% to 4.56%.
While the gap is small, this shows how lenders are responding to expectations that rates may eventually fall – but not quickly. Industry experts suggest fixed deals are likely to stay relatively stable, with only modest adjustments in the short term.
What the Experts Are Saying
Mortgage analyst Matt Smith explains:
“A Base Rate hold today had looked fairly nailed on, especially after the inflation data. With the Budget still to come, markets have pushed back expectations for the next cut into early 2026. Rates could drift higher in the coming weeks as lenders feel pressure, though housing demand remains resilient.”
Other brokers echoed this, noting that while another cut in 2025 is not impossible, it is unlikely unless inflation shows clear signs of retreating.
What Does This Mean for Your Mortgage?
- Fixed-rate mortgages: If you’re already on a fixed deal, your payments won’t change until the end of your term. But if your deal is ending soon, it’s worth exploring new offers early. Many lenders allow you to secure a new rate up to six months in advance.
- Tracker or variable mortgages: These are directly linked to the Base Rate. Since the rate was held, your monthly payments remain unchanged this time.
- Standard Variable Rates (SVRs): If you do nothing when your fixed deal ends, you’ll likely roll onto your lender’s SVR – currently averaging 7.14%. This is significantly higher than fixed deals, so shopping around could save you thousands.
The Mortgage Charter, introduced in 2023, gives borrowers more flexibility, including the ability to secure a new deal ahead of time. Still, the process of switching or remortgaging can take weeks, so early planning is key.
What About Savings?
For savers, the hold may provide some relief. After last month’s cut, some banks reduced their variable rates. By holding steady at 4%, the threat of further immediate cuts has eased.
- The best easy-access accounts still pay around 4.4% to 4.75%.
- One-year fixes are currently around 4.45%, while two-year fixes offer roughly 4.44%.
Although real returns are being eroded by inflation, switching accounts remains one of the simplest ways to boost savings income. Those nearing their Personal Savings Allowance may also consider using ISAs for tax-free interest.
When Could Interest Rates Fall Again?
The BoE’s Monetary Policy Committee meets every six weeks. History shows that once rates peak, they tend to stay flat before gradually easing. For now, markets believe the next cut may not come until early 2026, though the picture could change if inflation drops faster than expected or global conditions shift.
The next announcement is scheduled for Thursday, 6 November 2025 at 12pm.
Final Thoughts
The Bank of England’s decision to hold the Base Rate at 4% reflects its cautious stance in the face of persistent inflation and global uncertainty. For homeowners, this means stability in the short term but potential increases in fixed mortgage pricing if market pressures continue. For savers, competitive rates remain available, but the best deals may not last.
Whether you’re planning to remortgage, buy a home, or review your savings, now is a good time to stay proactive. Locking in deals early and shopping around can make a significant difference to your finances.
