INDUSTRY REACTION: Bank of England holds base rate at 4.25%
As the financial markets expected, the majority of the Banks' MPC has voted to keep the base rate on hold.
The Bank of England’s Monetary Policy Committee has voted by six to three this morning in favour of keeping its base rate on hold at 4.25%.
It was a decision that had been widely anticipated, as stubbornly high inflation and events in the Middle East have given it little room for base rate manoeuvre.
When the base rate was cut in May from 4.5% to 4.25%, that was the third reduction this year. And just the month before, the money markets were predicting up to four further reductions. The picture, though, has changed considerably since then.
In April, there was a shock rise in inflation to 3.5% (later revised to 3.4%) and the latest figures show that it was no blip, with May’s figures again above expectations at 3.4%.
And, with the conflict between Israel and Iran already pushing up energy costs and the effects of Trump’s tariffs still unclear, the Bank is unlikely to be able to get inflation below its 2% target for some time to come.
The Bank, though, is under pressure to stimulate a struggling economy that saw a shock 0.3% contraction in GDP in April. It says of the decision: “The Committee will remain sensitive to heightened unpredictability in the economic and geopolitical environment, and will continue to update its assessment of risks to the economy.”
In better news for the property industry, the money markets are still expecting more cuts, but only one or two and later in the year, with inflation remaining above 3%.
Industry reacts
While a further cut would have been welcome, today’s hold ensures the market remains on a steady footing.”

Iain McKenzie, CEO of The Guild of Property Professionals, says: “For the housing market, this decision provides stability rather than a new stimulus. The benefits of the May rate cut are still filtering through, with recent sub-4% mortgage headlines helping boost market activity to a four-year high for agreed sales. This ongoing momentum, coupled with lenders relaxing affordability criteria, means the market is well-placed to continue its resilient performance.
“While a further cut would have been welcome, today’s hold ensures the market remains on a steady footing. The balance between buyer demand and a healthy increase in housing supply will continue to support transaction levels while keeping price growth in check. All eyes will now be on the next set of inflation data to signal the Bank’s future direction.”

Jonathan Handford, MD of Fine & Country, says: “While inflation remains above expectations, the housing market has shown remarkable resilience – buoyed by the May rate cut, improving mortgage affordability, and lender adjustments to borrowing criteria.
Market remains steady
“Activity remains steady, with May seeing a four-year high in sales agreed. With supply also up 13% year-on-year, buyers are benefitting from greater choice, while house prices growth is being kept in check. Holding rates steady should help sustain market momentum without adding further inflationary risk.”

Matt Smith, Rightmove’s mortgages expert says: “Home-movers will have to wait a little longer for a third Bank Rate cut of the year, but today’s hold was widely anticipated.
“Despite the global uncertainty and turbulent events that we’ve had so far this year, the mortgage market has remained fairly stable. We’re broadly where the markets expected us to be at the start of the year in terms of inflation and rate cuts.
“Lenders have a bit of room to reduce rates further even with a hold in the Bank Rate today so home-movers can still be hopeful of some small mortgage rate cuts over the next couple of weeks.
“Average rates have been pretty flat in recent weeks, but we have seen increasing signs of competition amongst lenders as they have reduced their stress-testing criteria and with new mortgage products coming back to market, lenders are looking at ways to support more people get the home that they want.”

Nathan Emerson, CEO of Propertymark, says: “There has been much talk of base rate cuts potentially happening across the summer months, and although today hasn’t delivered any dip, it remains positive to witness overall stability.
“This is especially prevalent when you consider the vast turbulence we have seen across the wider global economy.
“As we head further into the summer months and as the housing market hits its seasonal busy period, if conditions permit, it would be positive for consumers to have that much-anticipated catalyst of further cuts in base rate to help boost affordability and confidence.”
Today’s decision is a sign of prudence rather than of pessimism.”

Tom Davies, Group Financial Services Managing Director at LRG says: “Today’s decision is a sign of prudence rather than of pessimism. The economy started the year with some momentum, but underlying activity remains fragile. Businesses are still absorbing higher employment costs, and global challenges such tensions in the Middle East (potentially inflating oil prices) are feeding into a more cautious approach.
“I do not expect the property market to be negatively impacted by today’s decision. Mortgage rates are in the 4% range, with ‘best buys’ starting with a 3, which, in historical terms, is healthy.
“Lending criteria is beginning to loosen on affordability and we are seeing increased appetite from lenders. Perhaps most importantly, stock levels are approximately 12% higher than this time last year, compared to buyer demand, up by 3%. This combination creates significant opportunity – for buyers and sellers.
We’ve seen it many times before: confidence returns, stock shrinks and prices climb.”
“While there’s always a temptation for buyers to wait for the next rate cut, in practice the impact of a lower mortgage rate could be offset by rising prices if stock tightens again. We’ve seen it many times before: confidence returns, stock shrinks and prices climb.
“For prospective buyers, the key question shouldn’t be, ‘Will the rate fall again soon?’ but, ‘Can I afford to buy now, and is the right property available?’. Today that answer is more often yes than no. Buyers who wait for the perfect moment may find it never arrives – or that it passes them by.
Mortgage market
“What matters now is a functioning, competitive mortgage market with realistic pricing and good choice. That’s a strong foundation: a good environment for anyone looking to move or invest.
“We expect to see further rate cuts later in 2025, probably in August and again in November. But by then, some of today’s advantages may have shifted. So for buyers looking to secure a good mortgage and a wider choice of stock, this is an excellent time to go for it.”
Beneath the surface, the picture is still sticky.”

Nicholas Mendes, Head of Marketing at mortgage brokers John Charcol, says: “Headline inflation edged down to 3.4 per cent in May, helped along by lower fuel and air fare prices. But beneath the surface, the picture is still sticky. Services inflation, a key measure the Bank keeps a close eye on, eased to 4.7 per cent, still some way off the 2 per cent target. Core inflation dipped too, but only just, coming in at 3.5 per cent.
“Wage growth remains strong, and although the jobs market has started to cool with unemployment nudging up to 4.6 per cent, there is not yet enough to convince the Bank that underlying inflationary pressures have been fully contained.
Global instability
“Then there is the global picture. The threat of fresh energy shocks, particularly if tensions in the Middle East escalate further, adds another layer of risk the Bank cannot afford to ignore. Any disruption to oil flows through the Strait of Hormuz could quickly feed through to prices at the pump and the CPI.
“Markets still expect a cut or two later this year, possibly as soon as August. But for now, the MPC is sitting tight, and that feels like the sensible choice.”
It’s another example of cautious drift over clear direction.”

Paul Noble, CEO of Chetwood Bank, says: “A hold today is the cautious choice, but leadership means more than playing it safe. The MPC’s decision will be welcomed by some, but it’s another example of cautious drift over clear direction. Holding their ground may make sense given chaotic global pressures, but it’s not the decisive leadership our economy needs.
“The economy has been through the ringer, with the Chancellor’s plan providing domestic pressures to add to those caused by the US, Russia, and beyond. However, the central bank continues to act as though inflation is the only variable that matters.
Mortgage uncertainty
“The MPC’s lack of action piles on greater uncertainty for mortgages as well, leaving would-be buyers in the lurch. This cautious approach could lead to greater paralysis when what markets need is a catalyst. For savers, the risk is time – it’s vital to find to best returns, to stay flexible, and to stop letting handwringing on Threadneedle Street dictate their outcome.”