The Bank of England has held the base interest rate at 5% after deciding against a cut, it was announced today.

The Bank’s Monetary Policy Committee voted by a majority of 8–1 to maintain the rate at 5%. One member wanted to reduce it by 0.25%, to 4.75%.

Many experts expected the Bank to hold the rate this time, but to make a cut in November and December once it considers the war on inflation is won.

The Bank cut its base interest rate by 0.25% from a 16-year high of 5.25% to 5% last month, when members of its Monetary Policy Committee and Governor Andrew Bailey (main picture) voted narrowly for a reduction by five votes to four.

Stubborn inflation

The inflation rate held stubbornly at 2.2% in July, it was announced yesterday, which may have influenced the MPC members away from a cut.

But the Federal Reserve in the US cut its base rate yesterday for the first time in four years, which some analysts believed may persuade the Bank to consider reducing the UK rate.

Industry reaction

Stephanie Daley, Director of Partnerships at mortgage broker Alexander Hall, says: “The Bank of England’s decision to hold interest rates steady provides stability for homebuyers and those looking to remortgage, especially with the sub 4% mortgage rates we are now seeing for 2- and 5-year fixed terms.

“As we approach the two-year anniversary of the Liz Truss mini-budget, this decision offers a sense of predictability, allowing the market to maintain its positive outlook for the remainder of the yea,” she says.

“September has already been an incredibly busy month, with strong confidence from homebuyers, and keeping rates unchanged should help sustain this momentum, encouraging continued activity in the property market.”

Amy Reynolds, Head of Sales at estate agency Antony Roberts, says: “The August rate cut gave the property market a huge boost, even though it’s traditionally a quiet month. Likewise, a rate reduction this month would have propelled the market forwards as there is still time to move before the end of the year.

“However, a November rate reduction to 4.75 per cent always looked more likely. If that does happen, it will be too late to impact the market this year unfortunately but will hopefully kickstart the 2025 market,” she says.

“While the Bank hasn’t moved on rates, lenders are already bringing mortgage rates down, which is encouraging borrowers to make their move.”

Ben Thompson, Deputy CEO at the Mortgage Advice Bureau, says: “It’s business as usual, in terms of interest rates. But there’s no need to worry, as this was signalled for some time and it was always unlikely for the Bank to cut rates in consecutive months so early on in the cutting cycle.

“September has already seen cuts across the mortgage market for those refinancing, and with innovations and reductions also coming for first time buyers, it’s shaping up to be a positive autumn in the housing market.”

Nicky Stevenson, MD at Fine & Country, says: “Despite the decision to keep rates where they are for now, the UK property market is poised to see an upswing in activity this Autumn. There has been an increase in supply, as well as heightened buyer and seller activity, and a renewed confidence following the previous cut in rate.

“Traditionally there has been an increase in activity in the property market following the seasonal dip over the summer holiday season. Many have already been spurred on by the previous rate cut and sentiment is improving,” she says.

“With the supply of homes at a seven-year high, buyers will have more choice if they decide to get into the market.”

Kevin Shaw, National Sales MD at LRG, says: “After a reduction in August, the decision not to reduce interest rates further in September was what we’d expected.

“The impact of August’s cut has had the desired effect of changing sentiment towards affordability, and at LRG we’ve seen a very positive revival in the last month. Instructions (supply) and applicant levels (demand) are both up year-on-year (11% and 7% respectively), and this has had a significant impact on sales – which are up 27% year-on-year across the LRG brands.

“The Government’s, and the Bank’s, stated aim is to bring interest rates down further this year, and so we hope to see the second drop of the year at the next Monetary Policy Committee on 7 November and perhaps one further reduction before Christmas,” he says.

“We need more than a single reduction of 0.25% to reestablish confidence across the market.”

Nathan Emerson, CEO at Propertymark, says: “Since the initial rate cut a few months ago, many people will have been closely awaiting any further anticipated cuts, however, it remains crucial the Bank of England continue to implement cuts in a controlled and functional manner, as not to fast reverse the economic progress so far.

“Bearing in mind yesterday’s figures regarding inflation, it is understandable why the decision to hold the base at current levels has been employe,” he says.

“Propertymark remains keen to see full consistency within the wider economy and for any eventual base rate cuts to create a pathway for people that provides long-term stability, confidence and affordability.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The Fed’s cut in interest rates has probably come too late to persuade the Bank of England to follow suit.

“However, the direction of travel for mortgage rates has been steadily downwards and is of much more relevance ‘on the street’ to our buyers and sellers than what happens with base rate,” he says.

“A period of stability in base rate may actually be welcome as continuing falls may cause anxiety among buyers that they may miss out if they don’t hold off for longer.

“This hold has been expected so the impact on the market is not likely to be huge. Arguably the forthcoming Budget will have more of an impact, particularly for higher rate taxpayers who are potentially feeling more vulnerable to unwelcome changes.”

Mark Harris, CEO at mortgage broker SPF Private Clients, says: “All the signs were pointing to a rate hold this month, so it’s not hugely surprising that the Bank of England has kept rates at 5 per cent.

“With inflation sticking above the 2 per cent target and expected to edge up in the autumn, the Bank was always likely to remain cautious although the markets still expect at least one further rate reduction before the end of the year, perhaps in November,” he says.

“There is a strong argument for the Bank to get on and cut rates again, giving borrowers an affordability boost, easing pressure on household finances and in doing so, assisting the wider economy. If worries about the Budget are realised, the need to boost transactions and activity in the housing market will be all the more apparent.

Matt Thompson, Head of Sales at Chestertons, says: “With inflation ever so slightly above the 2% target, it was unlikely for the Bank of England to announce a rate cut but more probable following the next Monetary Policy Committee meeting on 7th November.

“In the meantime, buyer interest has picked up since interest rates were reduced to 5% in August. At the time, the rate reduction boosted buyer confidence which led to more house hunters resuming or starting their property search.”

Simon Gammon, Managing Partner at Knight Frank Finance, says: “Caution from the Bank will have little impact on the slow, downward trajectory of mortgage rates. Global inflation looks increasingly benign, so much so that the Federal Reserve opted for a bumper 50 basis point cut yesterday. That brightening global picture is pushing swap rates down, giving the lenders leeway to keep cutting.

“Wednesday’s UK inflation data did little to change the narrative that the Bank of England has the wiggle room to cut the base rate once or twice before the end of the year, which should help usher in sub-4% two-year fixed-rate mortgages,” he says.

“While that’s higher than most people are used to, rates at that level are palatable and will support a sustained recovery in housing market activity.”

Gareth Lewis, MD at MT Finance, says: “Today’s decision to hold rates steady reflects the reality of the current economic landscape. This is indeed a prudent move that signals stability.

“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,” he says.

Nick Leeming, Chairman of Jackson-Stops, says: “The Bank of England’s decision to hold rates steady was widely expected, but does suggest that bringing interest rates down will be a test of stamina not speed.

“Stubborn inflation over the summer months and Labour’s first fiscal statement fast approaching will no doubt be weighing on the market’s mind; the Bank has opted today to offer stability by exercising quiet caution.

“While further cuts to the base rate would help to remove a number of obstacles for buyers and sellers, what the property market needs above all is certainty. A sensitive, gradual, adjustment to the base rate can offer that,” he says.

“We are already seeing greater levels of activity within the market, and house prices steadily increasing on a month-by-month basis.”

Guy Gittins, CEO at Foxtons, says: “The nation’s homebuyers will have understandably been hoping for a second consecutive rate reduction today, having already responded favourably to what was the first cut in four years at the start of August.

“Since then, we’ve seen an increase in buyers entering the market by way of strengthening mortgage approval numbers and they are doing so with far greater confidence, which is helping to cultivate a consistent level of upward house price growth,” he says.

“Whilst rates have been held today, this improving market momentum is only likely to strengthen further, as mortgage rates continue to trend downwards, putting the property market in very good stead for the remainder of the year.”

Jonathan Samuels, CEO of Octane Capital, says: “The mortgage sector has been responding well to the market certainty that followed the Bank of England’s initial decision to hold rates at 5.25%, and this market sentiment has only improved further following the base rate reduction seen at the start of last month.

As a result, we’re not only seeing the rates offered on many products reducing, but the range of products available is also growing, with this greater level of choice helping more buyers to enter the market,” he says.

“Today’s decision to hold interest rates at 5.00% is unlikely to dent this growing market positivity and we expect more buyers to be tempted back into the fold, while the overall health of the UK property market will continue to strengthen.”

John Phillips, CEO of Just Mortgages and Spicerhaart, says: “Today’s decision was widely expected given the cautious approach the Bank of England continues to adopt. News of inflation remaining unchanged would have certainly been a relief for the central bank, but not enough for it change course and move to sequential cut.

“The Fed’s large cut last night wasn’t a big enough driver either, even with the central bank’s tendency to follow their lead. Nonetheless, sentiment continues to point towards the next cut coming in November, barring any surprises or potential shocks to the economy – either at home or from abroad,” he says.

“Even without another rate cut though, we are continuing to see activity across the market, with lenders in all sectors making reductions and criteria changes to encourage new business and increase market share.

“From our perspective, clients have responded well to the changes in the market and returned from the summer break with house moves back on the agenda.”

Iain McKenzie, CEO of The Guild of Property Professionals, says: “As many economists predicted, we will have to wait until November to potentially see another cut in the rate. Even though the decision was made to keep the rate steady for now, the impact of the previous cut is already being felt as confidence grows in the market.

“Other elements are also pointing to a more positive shift in the market, with demand continuing to strengthen and mortgage approvals in July reaching their highest level in almost two year,” he says.

“Transaction levels have also steadily recovered, up 6.7% year-on-year in July. With many of the major lenders reducing their mortgage rates in response to the previous cut, we expect to see activity in the market warm, as the temperature drops and we move into the colder months.”

Matt Smith, Mortgage Expert at Rightmove, says: “We’re still expecting two rate cuts before the end of the year, and home-movers should continue to see a downward trend in mortgage rates this side of Christmas.

“I think overall, there’s likely to be quite a moderate response from lenders in response to today’s news – and whilst rates should continue to come down, mortgage lenders’ funding costs are unlikely to come down significantly, which wouldn’t leave heaps of room for dramatic mortgage rate cuts.

“However, we’ll monitor how things play out over the coming days, and I think we could see a mixture of some lenders holding rates while others cut further to drive up pre-Christmas busines,” he says.

“Overall, I think there’s an optimistic mood about where we’re heading, and lowering mortgage rates is supporting the increased home-moving activity we’re seeing right now particularly against last year.”