The Bank of England has announced its decision to hold the base interest rate at 4.75%, following today’s Monetary Policy Committee (MPC) meeting—a widely expected outcome.
This comes as inflation rose to 2.6% in November, exceeding the Bank’s 2% target for the second month in a row.
Interest rates are a key tool to manage inflation, with higher rates making borrowing more expensive, reducing demand, and slowing price rises. However, this impacts the property market, where higher borrowing costs can dampen activity and reduce affordability for buyers.
The Bank’s base rate heavily influences the rates charged by High Street banks for loans and credit cards. While lenders have largely “priced in” this decision, mortgage rates remain high. The average two-year fixed mortgage rate is 5.04%, and a five-year deal averages 4.14%, according to Moneyfacts.
Despite the November cut from 5% to 4.75%, accelerating wage growth and inflation suggest rates may stay high longer. The decision reflects the MPC’s aim to balance inflation control with economic stability. The vote split was 6 in favour of holding and 3 in favour of reducing by 0.25%.
Below, industry experts share insights on how this decision could shape mortgage rates, property trends, and strategies for professionals and clients alike:
Nathan Emerson, CEO of Propertymark, comments: “With many national and international factors continuing to shape the global economy, the Bank of England is understandably taking a cautious path until they can be confident that they are able to safely reduce interest rates back. It has been encouraging to see interest rates reduced across recent months, but the base rate can only be reduced if all factors allow.
“High interest rates can of course affect borrowing for many people, especially those stepping onto the housing ladder, but it’s important there is sensible balance to keep the overall economy secure and workable for all.”
Stephen Gomez, Mortgage Adviser at Wesleyan, said: “The decision to hold rates at 4.75% was expected after inflation ticked back up in November, thwarting any hope of an early Christmas present for mortgage holders.
“All the indications are that rate setters will keep up their cautious approach through 2025.
“That’s helping to prop up mortgage rates and means the outlook for homebuyers and remortgage customers will stay uncertain.
“Any decent mortgage deals don’t tend to last long, so borrowers have to keep a close eye on the market and be prepared to move quickly.
“While mortgage rates are expected to fall over the longer term, that will be little comfort to the thousands of homeowners with fixed rate deals coming to an end in the months ahead.”
Henry Knight, Managing Director at Springtide Capital Mortgage Brokers, says: “The chance of interest rates going down was unlikely due to data published on 20 November showing that inflation had jumped to 2.3% in October. Maintaining the UK’s base interest rate at 4.75% was widely anticipated but it is still a good time to take action. If you are looking for a new mortgage deal, it would be advisable to secure a deal as soon as possible and keep it under review as the market evolves. Most mortgage offers are valid for 6 months from date of issue.
“Forecasts for interest rates in 2025 suggest a downward trend, with predictions of the base rate falling to around 3.5%. This decline is anticipated to translate into lower mortgage rates, benefiting both new purchasers and those looking to refinance. By securing a mortgage offer now you are ready and in a strong position to act accordingly, depending on how the market changes.”
Ben Allkins, head of mortgages and protection at Just Mortgages, said: “It’s safe to say today’s decision was widely expected and I think even the most avid supporter for rate cuts would say it’s probably the right call. The positive to take is that the path of interest rates in 2025 is still set to move downwards. Of course the central bank will have to carefully balance the uptick in inflation with an economy showing signs of stress. That’s without considering the potential of any external shocks too.
“Speaking with our brokers and the lenders we work with, the general consensus for 2025 is positive. There’s no doubt that clear challenges will absolutely remain, particularly around affordability. At least a hold on the base rate brings some stability which is always well received by the markets and by swap rates. This may give lenders some leeway to make movements as they look to build their pipeline heading into the new year.
“Brokers will continue to play a fundamental role in helping clients navigate a challenging and ever-changing market. As a result, they need to have a clear presence in their local market, educating clients and highlighting the opportunities that are still available.”
Kevin Shaw, National Sales Managing Director, LRG: “It is disappointing that that Bank of England has decided not to reduce interest rates further today, considering that the UK’s interest rate (at 4.75%) is out of sync with the ECB (at 3%) and other comparative economies globally.
“My view is that the Bank was too slow to increase rates back in 2023 and now runs the risk of being too slow to reduce them. The Bank needs to release the handbrake on the economy as soon as possible.
“A variety of economic indicators – from business confidence and employment rates to consumer spending – suggest that a December drop would have brought some much welcome seasonal cheer. I am now hopeful of an interest rate reduction on 6 February.
“In the meantime, however, the start of the year is likely to provide some momentum – whether from those keen to initiate a move as part of their New Year’s resolutions, or in a rush to avoid the Stamp Duty hike in April. Furthermore, despite the holding of interest rates today, mortgage lenders are already competing on rates.
“I remain optimistic of a rush of activity in January, and a lowering of interest rates in February which will keep the momentum going into the Spring market.”
Joe Pepper, UK Chief Executive Office at PEXA, said: “Following a tough Autumn Budget, yesterday’s rise in inflation solidified the Bank of England’s decision to hold interest rates. Although unsurprising, another pause in the slow road to economic recovery will surely be unwelcomed by borrowers hoping for further reprieve in their borrowing costs.
“We could well now see remortgage activity stagnate until the end of January – activity is usually suppressed over the Christmas period anyway, and with no hope of lower rates, borrowers will wait it out until their products expire. This combined with the rush for buyers to get transactions over the line before the Stamp Duty returns to ‘normal’ will unleash colossal pressure on conveyancers.
They work as quickly as possible, but do not have adequate back-end infrastructure to drive the level of efficiency needed to deal with heightened demand. Tackling this is of critical importance if we are going to actually stimulate the housing market in the long-term as Labour indicates is a top priority.”
Simon Webb, managing director of capital markets and finance at LiveMore, commented: “No third time lucky this month for borrowers on SVRs, trackers or first-time-buyers hoping for a reduction in the Bank Rate again. After the increased borrowing announced in the Autumn Budget that set markets in a flurry, and November’s repeated rise in inflation, it’s no surprise that the MPC voted against a base rate drop – for now at least.
“There are many thousands of borrowers aged 50 to 90 plus whose interest-only mortgages have expired – or are about to. They’re finding themselves trapped, paying their lenders’ higher standard variable rates, when in fact they often do not need to. There is a much wider choice of affordable solutions for mid to later life borrowers on the market today. And tools such as the LiveMore Mortgage Matcher® can help brokers navigate the often complex later life market so they can find affordable solutions for clients’ specific circumstances in these changing times.”
Stephanie Daley, Director of Partnerships at mortgage advisor Alexander Hall, commented: “The Bank of England’s decision to hold interest rates at 4.75% comes as no surprise, given the current economic climate. With UK inflation rising to 2.6% in November – the second consecutive monthly increase – and core inflation climbing to 3.5%, there’s clear upward pressure on prices.
“For borrowers and homeowners, stability in the base rate this month goes hand in hand with the expectation of a very slow downward movement in the base rate.
“Forecasts still expect future base rate drops next year but in the short term the sustained inflation trend will likely keep lenders vigilant and mortgage pricing reflective of longer-term uncertainties.
“It is essential for both home movers and remortgage clients to seek advice in order to navigate these challenges and find solutions that best suit their financial situations in what still remains a very changeable market.”
CEO of specialist lender Octane Capital, Jonathan Samuels, commented: “Whilst it’s been a largely positive year for the property market, we simply haven’t seen the base rate reductions that many had hoped for and, as a result, higher mortgage rates have remained a challenge for many borrowers.
“We’ve seen inflation rear its head again in recent months and so a hold was always going to be on the cards today. However, the silver lining is that we remain in a far more positive place than we did even a year ago and buyers should continue to act with a greater degree of confidence when traversing the market, as they have done for much of this year.”
Director of Benham and Reeves, Marc von Grundherr, commented: “Not the Christmas cracker that many homebuyers were hoping for but not quite a lump of coal either and today’s hold on the base rate will do little to impact the current trajectory of the property market, particularly given the stamp duty deadline in place.”
Robert Sadler, Vice President of Real Estate at Excellion Capital: “When the base rate was cut back in November, there was wide expectation that it would be the first of at least two cuts before the end of the year, but at Excellion we sensed that the market response to Labour’s inflationary Autumn Budget would in fact mean that any further base rate cuts in 2024 were highly unlikely.
“With recent rises to inflation and the 5-year SONIA swap rate up more than 30 basis points in the past week alone, investors are desperately holding out for some kind of relief. Sadly, it hasn’t come today. As a result, on the residential side, we’re likely to see mortgage rates increase, and on the commercial side we’re looking at heightened investor caution driven by increased borrowing costs.
“For the government itself, this is also bad news as it means their ambitious housebuilding targets are now even further out of reach than they were before because this hold will likely mean projects cost more and move more slowly. At a time when the UK needs an environment of ambition and calculated risk taking, this base rate decision is likely to foster one of caution and constraint.”