The Bank of England has today held its base rate at 4.5% just a month after cutting it by 0.25%.

This latest decision comes as global political jitters and national economic wobbles persuaded the bank’s Monetary Policy Committee not to take a further and riskier cut to interest rates.

At its meeting yesterday the MPC voted by a majority of 8–1 to maintain Bank Rate at 4.5%. One member preferred to reduce Bank Rate by 0.25 percentage points, to 4.25%.

Within its commentary just out, the committee say: “There has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations.

“That progress has allowed the MPC to withdraw gradually some degree of policy restraint, while maintaining Bank Rate in restrictive territory so as to continue to squeeze out persistent inflationary pressures.

“Since the MPC’s previous meeting, global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements, to which some governments have responded.

“Other geopolitical uncertainties have also increased and indicators of financial market volatility have risen globally. The German government has announced plans for significant reform to its fiscal rules.

“While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.”

Factored in

Mortgage lenders have already largely factored in this base rate decision into their lending in recent weeks and, as the latest Rightmove mortgage tracker reveals, rates for fixed-rate home loan have, despite dipping on an annual basis, moved downwards by only small percentage points over the past week.

The tracker also reveals that only those with larger deposit are now accessing the best rate, an indication of risk appetite among lender.

Matt Smith, the portal’s mortgage expert, adds: “Now that this expected interest rate hold is out of the way, all eyes are on May’s decision where the current forecast is a second cut of the year.

“Since the last decision in February, average mortgage rates have trickled downwards slightly but pretty much stayed flat.

“We’re seeing lenders try to price competitively where they can to capture business during some of the busiest months of the year for home-moving. However, there currently isn’t much wiggle room for lenders to offer cheaper rates, and hopefully a second cut can spur forward another wave of falling rates, and bring average rates closer to 4% rather than 5%.

“Some lenders may have also priced their products to manage volumes of new cases, as they try to protect their operational capacity at the start of the year to process as many completions as they can ahead of the Stamp Duty deadline.

“As the Stamp Duty deadline will pass soon, they could then release this capacity, and as a result we may see some lenders start to price even more competitively.”

Other reactions

Nathan Emerson, CEO of Propertymark

“Today’s news will likely prove encouraging for many people who are hoping to progress on the housing ladder,” he says.

“It is reassuring to see the base rate held, especially considering the many national and international factors that continue to shape the global economy currently.

“With inflation currently standing at 3 per cent, which is above the initially targeted rate by the Bank of England, it important there is very careful consideration over the forthcoming months to keeping the economy heading on the right pathway. Higher interest rates can of course affect mortgage products that are on offer, so it would always be welcome to see base rates lower when the wider economy fully allows.”

Jason Tebb, President of OnTheMarket

“As widely expected, the Bank of England has voted to hold interest rates at 4.5 per cent. With inflation rising to 3 per cent, exceeding the Bank’s 2 per cent target, caution prevailed,” he says.

“While a hold in rates will be disappointing for borrowers, it does suggest a welcome level of stability which was not apparent when inflation was in double-digits and the Bank was forced to respond with consecutive rate hikes.

“The trajectory for interest rates is downwards, but with global uncertainty and inflationary pressures these reductions may take longer to filter through than the markets previously thought. The base rate reductions we have seen since August have boosted activity and transactions in the market, and further cuts, when they come, will bolster confidence.”

Iain McKenzie, CEO of The Guild of Property Professionals

“As expected, the market will have to wait a little longer for the second bank rate cut of the year. The Bank of England continues to walk a fine line, balancing efforts to control inflation with the need to stimulate economic growth,” he says.

“While the consensus forecast suggests the base rate will be around 3.75% by year-end, the Monetary Policy Committee is in no rush to reach that level, instead opting for a slow and measured approach to further rate cuts.

“The good news is that following the bank rate cut to 4.5% in February, there has been an increase of lenders that have introduced more competitive mortgage rates. For borrowers with a significant deposit, some fixed rates have recently fallen below 4%.

“Although the economy faces certain challenges in 2025, particularly from geopolitical tensions and lingering inflationary pressures – moderate GDP growth is still expected to drive strong levels of sales market activity and modest price growth throughout the year.”

Samantha Lindsay of My Mortgage Angel

“The hold on the interest rate today was widely expected and comes as no surprise,” she says. “There is still too much uncertainty in the world – between US politics, global economic instability, the heightened situation in Ukraine, a looming Budget announcement and inflation still a point away from target, lots of factors need to stabilise before further cuts are likely. 

“We briefly saw the return of sub 4% mortgage rates last month, but these were just flashes in the pan. Some lenders offered these then withdrew them at short notice which just created more panic and uncertainty for borrowers. What we really need to see is lenders working together to create a more sustained move towards lower mortgage rates for all.”

Nick Leeming, Chairman of Jackson-Stops

“Today’s decision by the Bank of England to hold rates reflects a growing sense of ambiguity about the UK’s economic outlook,” he says.

“A perfect storm of slashed growth forecasts, rising inflation, possible US tariffs and UK tax increases has caused the monetary policy committee to stick instead of twist with March’s decision.

“While Labour is downplaying the likelihood of policy changes in the Spring Statement, the second fiscal update from the Chancellor could either calm the seas or rock the boat. The lack of certainty of either outcome is causing the ‘wait and see’ mindset to creep in for businesses and consumers.

“Despite the wider economic picture, this has not dampened the spirits or commitment within the property market, with the latest HMRC data showing a 14% bounce in transactions, this is a market of opportunity, not fear.”

Robin Rathore, CEO of Bamboo Auctions

“Although inflation has increased slightly over the last few months, its sensible to hold rates as they are,” he says. “The mortgage market appears to have already priced this into the rates on offer so we don’t expect to see any significant impact to the property market following this month’s announcement.

“The stability is welcome and we are seeing a number of great opportunities coming to market. Now is a great time to sell and the agents we work with are seeing faster transaction times with strong bids and offers being placed online by buyers across the country.

“As we head towards the seasonal spring bounce we expect to see more active buyers coming to the market and more sellers looking to list their properties.”

Paresh Raja, CEO of Market Financial Solutions

“The past six months have shown that predicting base rate movements is never straightforward,” he says.

“The hope had long been that once inflation was brought under control, the Bank of England would rapidly reduce rates.

“But this was over simplistic; it overlooked the myriad other factors at play – economic and politically, domestically and internationally, the landscape is constantly evolving, and while further cuts to the base rate are still expected this year, it is likely that the central bank will remain cautious. Today’s decision reflects that.

“Where the property and mortgage markets are concerned, it is important that neither complacency nor inertia are allowed to set in. Sitting tight in the assumption that rates will tumble could prove risky.

“With data showing that house prices and buyer demand are on the rise, the market will clearly move ahead. So, the focus from lenders when serving brokers and borrowers has to be on delivering products and services that give clients the confidence to act in the here and now, with flexibility and optionality remaining key qualities in achieving this.”

Read the MPC commentary in full.