Bank of England decision makers have voted unanimously to hold the base interest rate at 3.75% today as inflation comes under pressure from the war in the Middle East.

Big increases in oil and gas prices could force inflation up, and the Bank would have been mindful of this.

Governor Andrew Bailey (pictured) and other members of the Bank’s Monetary Policy Committee (MPC) had been expected to reduce the rate this time after holding it in February.

But that was before the war with Iran broke out nearly three weeks ago, and although inflation fell to 3% in January from 3.4% in December, it could now be pushed up.

And major lenders have been raising their mortgage rates as the war starts to impact the economy. The Bank’s ratesetters meet again at the end of April and then in June.

A shock

The MPC describes the war as “a shock” to the economy and says: “The Committee will continue to monitor closely the situation in the Middle East and its impact on global energy supply and energy prices.

“It stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.”

Industry reaction

The agents

Kevin Shaw, National Sales Managing Director, LRG

“The Bank of England sitting on its hands today will not come as any great surprise. Only a few weeks ago, a cut looked quite likely, but the renewed instability in the Middle East and the inflationary shadow cast by higher oil prices have clearly made Threadneedle Street a little more cautious.

“That said, the housing market has so far shown a fairly British talent for keeping calm and carrying on. We are not seeing the conflict translate into any meaningful slowdown in agreed sales or new listings, and our application levels from would-be buyers are up 9% on 2025,” he says.

“For all the noise around inflation and geopolitics, plenty of people still want to move and, crucially, are willing to get deals done. The market remains price sensitive, as it has for the past two years, but demand is clearly present.”

James Evans, CEO at Douglas & Gordon

“Today’s decision to hold at 3.75% was the right call. The Iran war has reshaped the interest rate outlook, and the window from earlier this year, when mortgages were getting cheaper and first-time buyers were finding their footing, has closed for now.

“Average two-year fixed rates have risen to 5.20%, up from 4.84% on the eve of the conflict, and nearly 700 mortgage products have been pulled by lenders in the biggest upheaval since the Truss mini-Budget,” he says.

“But there are reasons for grounded optimism. The number of properties available is at an eleven-year high for this time of year, partly a reflection of broader market shifts, keeping price growth measured and giving buyers genuine choice.”

Verona Frankish, CEO at Yopa

“Today’s decision to hold the base rate is unlikely to come as a surprise, however, the important point is that the UK property market remains in a far stronger position than it was this time last year, despite increased instability on the global stage.

“Buyer confidence has improved, borrowing conditions have become more predictable, and a steady base rate will only help provide the certainty many domestic buyers need to move forward with confidence.”

Richard Merrett, Managing Director at Alexander Hall

“Recent developments in the Middle East have already been reflected within the mortgage market, with swap rates edging up and some lenders reducing product availability as they respond to short-term market movements.

“Against that backdrop, today’s decision to hold the base rate should provide reassurance for borrowers that the broader outlook remains one of stability.

“While the market has adjusted in response to recent movements, the medium-term picture for borrowing costs is still far more predictable than it was a year ago,” he says.

Guy Gittins, CEO Foxtons

“Today’s decision from the Bank of England was largely expected given the market movements we’ve seen in recent weeks following developments in the Middle East.

“So far this year, we’ve seen steady growth in both house prices and supply. We expect this to continue against the backdrop of a more stable and favourable position for borrowers when compared to twelve months ago, despite recent market adjustments.”

Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts

“Markets were widely expecting a hold in base rate today, but the tone of the announcement is just as important as the decision itself. Stability and clear guidance will be key in reassuring both lenders and borrowers after a period of heightened volatility driven by global events.

“Across the property market, while both buyers and sellers are naturally discussing the evolving situation in the Middle East, we are not currently seeing a material impact on pricing or transaction levels. Although the recent uptick in mortgage rates is unlikely to be welcomed, demand remains resilient, particularly for well-priced, high-quality homes,” she says.

“Many movers delayed decisions last year amid uncertainty around the Autumn Budget and the policy direction of the Labour Party, and there is still a clear underlying need to move. As a result, for the right property, committed buyers are continuing to proceed with confidence.”

Damien Jefferies, Founder of Jefferies London

“Today’s decision to hold the base rate will be viewed as a measured response to recent global developments, which have influenced sentiment across financial markets quite considerably in recent weeks.

“For international and high-net-worth buyers, consistency in monetary policy is key, so today’s decision to hold the base rate will provide some stability in this respect,” he says.

“London remains a highly attractive destination for global property investment, and in times of wider global change, we often see an increased appetite from overseas buyers looking to secure assets within established, transparent markets such as the UK.”

Marc von Grundherr, Director at Benham and Reeves

“Today’s decision to hold the base rate should help reinforce growing confidence across the domestic property sector, which has continued to perform well so far this year, with strong levels of buyer activity and steady transaction volumes being seen.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman

“Just a few weeks ago we were speculating how soon, and by how much, base rate would be cut at this meeting, not if it would. However, the no-change decision has come as a relief as some had thought an increase more likely.

“The improvement in activity in the housing market seen in the early part of 2026 is still there to an extent but caution now prevails. The Bank has recognised the importance of maintaining borrowing costs to counteract the inflation wave prompted by the Middle East war, which is already hitting the economy,” he says.

“In our offices, buyers who are not sellers are becoming increasingly conscious of the need to build in a contingency within calculations for higher mortgage rates as hostilities persist.”

Adam Jennings, Head of Residential at Chestertons

“The hold on interest rates provides reassurance for house hunters. As we enter spring, we expect buyer motivation to pick up further; especially from cash buyers who aren’t impacted by some lenders’ recent move to withdraw a number of mortgage deals.”

The lenders

Joshua Elash, Director at MT Finance

“Set against the dramatic backdrop of the conflict in Iran, this was the only expected outcome. It’s time to hold. This should be a brief measure.

“It is expected that visibility on a successful conclusion to the conflict with Iran will ease concerns on the impact rising energy costs are going to have on inflation. Only then would we expect the MPC to resume its previous course of gradual reductions to the base rate.”

Jonathan Samuels, CEO at Octane Capital

“Today’s decision to hold the base rate reflects a more cautious stance from the Bank of England but one that is to be expected given recent developments in the Middle East, which have already filtered through into swap rates and lender pricing.

However, while swap rates have climbed in the short term in response to these events, they remain notably lower than they were this time last year, and by a wider margin than the increase seen since the start of the Iran conflict.

As a result, the underlying outlook remains far more stable than it was a year ago, and holding the base rate should help lenders maintain confidence in their pricing, ensuring borrowers continue to benefit from a competitive and accessible mortgage market.”

The portals

Jason Tebb, President at OnTheMarket

“As expected, the Bank of England held interest rates at 3.75 per cent for another month. Although inflation fell to 3 per cent in the year to January, since then the conflict in the Middle East, rising energy costs and fears that this will fuel inflation have created a more cautious ‘wait and see’ approach, with a unanimous vote from the nine members to hold base rate.

“Interest rate cuts have proven to be hugely important for the housing market over the past few months, providing impetus and enabling buyers and sellers to plan ahead with more confidence.

“Six interest rate reductions since August 2024 have significantly improved buyer affordability and there will be understandable disappointment at the lack of another cut this month,” he says.

“With lenders pulling mortgage products and repricing upwards in recent days to reflect higher swap rates and maintain service levels, there is a degree of uncertainty and volatility. That said, people need to move, particularly those who may have delayed due to prolonged speculation surrounding last autumn’s Budget, and they are proceeding with their transactions.”

Matt Smith, Mortgage Expert at Rightmove

“Today’s decision to hold the Bank Rate was widely expected, and for most homeowners and home‑buyers, 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, and lenders are very aware of that.

“Recent geopolitical uncertainty has made financial markets more volatile. That volatility feeds into swap rates, which are the underlying costs lenders use to price fixed‑rate mortgages. As a result, some mortgage rates have nudged up slightly this week, even though the Bank Rate itself hasn’t changed,” he says.

“Lenders are being understandably cautious in this environment. Some are quicker than others to adjust rates, which can lead to uneven changes across the market.”

The industry leader

Nathan Emerson, CEO of Propertymark

“The decision to keep base rates on hold provides a welcome sense of stability for the property market. Mortgage repayments remain predictable, which is critical for households balancing cost-of-living pressures.

“Stability in interest rates can support continued buyer confidence and property transactions, particularly in a market already facing supply constraints and rising house prices. For sellers and landlords, this environment allows for measured planning, while buyers can explore financing options without the immediate concern of rising borrowing costs.”

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