The Bank of England has kept interest rates unchanged at 3.75%, a decision that was widely expected but which provides some welcome stability for borrowers, lenders and mortgage advisers alike.
With inflation holding at 2.8% and the economy showing signs of slowing, attention is increasingly turning away from the prospect of further rate rises and towards when the next cut might come. For mortgage and property professionals, the focus now shifts to what the Bank’s decision means for affordability, remortgaging activity and the outlook for rates, as policymakers continue to balance stubborn inflation against softer growth and labour market conditions.
Mortgage and property professional share their views on the recent announcement:
Kevin Shaw, National Sales Managing Director, LRG:
“The Bank of England’s decision to hold rates at 3.75% is better news than we anticipated even a week ago. After a year in which the economic mood music has lurched from anticipating numerous rate cuts to as many rises, this stability is extremely welcome.
Inflation is still 0.8% above the Bank’s 2% target and there is likely to be a lag in its reduction as a result of recent global instability. But the picture is materially better than it looked just a few weeks ago. If the ceasefire in the Middle East holds and oil prices continue to ease, that should feed gradually into confidence, costs and consumer behaviour.
In the housing market, the sentiment is important because buyers do not look at house prices alone – they look at mortgage affordability, energy costs, the many other costs that come with buying a new property, and of course, the future direction of the market. And the mortgage market has already started to respond: swap rates have moved down, and we are edging closer to seeing more mortgage products beginning with a three.
From LRG’s perspective, the market is looking up. Across our brands, new sales agreed are up 16% year-on-year for the first two weeks of June and offers are up 5%. That tells us that sellers are becoming more realistic and the number of serious buyers is increasing.
For first-time buyers, this is encouraging. Mortgage rates have not risen as many feared and lenders are showing more flexibility on deposits and income multiples. For sellers, the good news is that activity is returning, but pricing still has to meet the market.
Sentiment is not a fluffy concept in property. An increase in sold signs, whether on the street or online, is perhaps the most powerful factor in encouraging both sellers and buyers to commit to a move. This is exactly what the market needs as it enters the summer months.
So while today’s decision is not yet a green light for the market, it is certainly a move away from the amber flashing nervously.”
Sarah Thompson, Group Financial Services Director, Mortgage Scout, part of LRG:
“Today’s decision to hold the base rate brings some genuinely encouraging news for borrowers. Inflation has come in lower than many of us expected, which is a positive signal, and we are already seeing swap rates ease slightly as a result. A number of major lenders and building societies have started to move their mortgage rates down in response – small movements, but the direction of travel is welcome.
That said, the full picture is more nuanced. The current inflation figure does not yet reflect the energy price increases due to come through in the third quarter of this year, and the Bank of England has flagged that it expects inflation to tick up again as a result.
The European Central Bank raised its rate last week, which might have suggested further pressure here – but the Bank of England’s view is that by choosing not to cut in recent months, the UK has effectively already accounted for that. The message is one of stability rather than change, and meaningful cuts in the near term look unlikely.
What this means for borrowers is that the window to secure a competitive rate is open now, but there are no guarantees it will stay that way. With energy costs set to rise and global uncertainty still a factor, conditions could shift. For anyone due to remortgage in the next six months, the advice is clear: act now. You can lock in a rate today and, should rates improve before your deal completes, you can still move to a better option. But you cannot go back and secure a rate that has already gone.
For those in the property market more broadly, a rate hold is reassuring. No increases means greater confidence for buyers and sellers, and more opportunity to move forward with decisions that may have been on hold. What we are seeing with our remortgage clients is that too many are waiting for a signal that may not come. Preparation is everything – those who act early consistently put themselves in a stronger position.”
Adrian Moloney, Group Lending Distribution Director, OSB Group, comments on today’s Bank of England interest rate decision:
“The Bank of England’s decision to hold the base rate at 3.75% provides a degree of reassurance, but it also highlights the complex balancing act facing the MPC.
While inflation has shown encouraging signs of easing with April’s CPI at 2.8%, the trajectory back to target remains uncertain, particularly given the potential for renewed pressure from energy costs. Against this backdrop, today’s decision signals caution rather than clarity.
For the mortgage market, a hold on rates is unlikely to drive any immediate change in pricing. Lenders continue to take their lead from swap rates and forward expectations. Affordability remains stretched, especially for those approaching the end of fixed-rate deals and facing a markedly different refinancing environment. As a result, early engagement and access to specialist, structured broker advice will be increasingly important.
Within the buy-to-let sector, landlords are still adapting to a higher cost of borrowing, which continues to influence both investment decisions and rental dynamics. While the market has demonstrated resilience, it remains finely balanced, with sentiment closely tied to expectations around the future path of interest rates.”
Charles Resnick, Chief Finance Officer, Afin Bank, commented:
“No surprise that the Base Rate was held today, but it’s a case of rate cuts remaining delayed rather than being cancelled as the Bank of England waits for evidence that inflation is easing.
Yesterday’s news that CPI was holding steady at 2.8% was a surprise, so that has helped reduce near-term pressure to increase the Base Rate. However, inflation is still expected to rise over the summer as the Ofgem price cap increases.
With lower oil and gas prices pointing to a less severe peak, the question is how much of that energy shock will feed into prices and wages. The Bank of England’s Monetary Policy Committee will look for a clearer indication that second-round effects are contained.
Lenders are likely to remain cautious, with higher funding costs, subdued housing demand and elevated macro uncertainty limiting scope for repricing, but policy uncertainty should keep swap rates and lender pricing disciplined.
For savers, fixed-term deposit prices continue to be significantly higher than the Base Rate, providing an opportunity for customers looking to put their cash away for a while.”
Enzo Mora, CEO and founder of The Mortgage Brain:
“Stability is the name of the game right now with interest rates ticking downwards and the peace deal between the US and Iran. As we head into summer, lenders still have a strong appetite for lending and are competitively pricing mortgages.
However, it’s not just about interest rates, we have to keep a close eye on housebuilding volumes , which are still woefully low due to the uncertainty of build costs over the next 12 months, speeding up the buying and selling process and the perennial issue of Stamp Duty.
The government needs to take a radical look at this tax to make some permanent reductions which will help the property industry across the board and contribute to growing the economy.”
Ryan McGrath, Director of Second Charge Mortgages at Pepper Money, comments:
“Today’s hold reflects the difficult position the Bank of England finds itself in. With global economic uncertainty still very much in the picture, the MPC is clearly not ready to commit to a cut just yet.
For homeowners, the reality of this prolonged higher-rate environment is already showing up in borrowing behaviour. Consumer demand for second charge mortgages remains strong, and that’s not a coincidence. More people are choosing to raise funds against their home without touching their existing mortgage, because disturbing a competitive fixed rate to access extra capital simply doesn’t make financial sense for many of them right now.
What we’re seeing in the market points to a structural shift, not just a short-term trend. Demand for loans continues to hold up well, even as criteria tighten and affordability gets squeezed. Until rate cuts become a consistent reality, the second charge market will remain a practical, mainstream route for borrowers looking to manage their finances sensibly.”
Tony Hall, Head of Business Development at Saffron for Intermediaries comments:
“Few will be surprised to see rates left unchanged this month. With inflation still above the 2 per cent target, policymakers have opted on the side of caution. Although speculation of a rate increase had grown in recent weeks, today’s decision shows there are still grounds for cautious optimism.
Lender competition remains strong, with mortgage rates continuing to edge down, and buyer demand remaining resilient. Meanwhile, the FCA’s proposed mortgage reforms are a welcome step towards borrower flexibility. However, affordability remains a key concern, making expert mortgage advice more important in helping borrowers navigate a fast-moving market”
John Phillips, CEO of Just Mortgages and Spicerhaart, said:
“I think even with the surprise news on inflation yesterday, this was always the most likely outcome. We shouldn’t be disappointed, though, particularly with more hawkish members of the MPC calling for hikes. That threat does appear to be dissipating, but it’s certainly not gone for good.
Even with the signing of an initial peace deal that intends to end the war, the impact of the Middle East conflict is still likely to feed through in the coming months – members will be conscious of this. I’d argue though that we also need to consider economic growth which wouldn’t be helped by any future increases in rates.
Even with this backdrop, we have been seeing positive movements in the mortgage market and some increasing competition. The overriding message that brokers need to be sharing with clients is that there is still plenty of money out there and lenders that are willing to lend. Rate changes are coming with tweaks to products and criteria as lenders hit the halfway point of the year and look ahead to their end of year targets.
Depending on where they are, lenders are having to be a bit braver and bolder in their appetite to risk and in their pricing to make sure they end the year where they want to be. This is good news for potential borrowers and all the more reason why they should rely on quality advice.”
Andrew Lloyd, Managing Director at Search Acumen, said:
“An interest rate hold and falling bond markets is exactly what borrowers needed this week. Signalling a move to stability, mortgage lenders are likely to offer competitive deals off the back, that might help nudge buyers along.
Importantly, interest rates alone won’t stop the economic malaise that seems to have overtaken the UK. The market is being drained of energy by political inertia.
I’m hearing the same story of 60 people tracking a single property – yet no viewings, no offers. Until we thaw the market, price signals will stay distorted.
We’ll need a sustained decrease in inflation to stop Bank of England policymakers feeling rattled. That will require stability in the Middle East and a path to ending trade disruption.
This is a stark reminder of how exposed the UK economy is to global shocks. You can see it in markets too, where US dominance, especially in big tech, continues to set the pace.
We require creative thinking to support economic improvement, looking first at places where inefficiency has been allowed to creep in. Whilst many agree that property tax is in need of reform – stamp duty increasingly feels like a relic of the past – a potent mix of harnessing AI simultaneously with policy could unlock meaningful long-term growth for housing and investors.”
Joe Pepper, UK Chief Executive Officer, PEXA, said:
“No news is good news for borrowers and prospective buyers. With geopolitical tensions easing this week, inflation expectations are being revisited, and we are likely in for a period of interest rate stability rather than rises. This should support market activity as we head into the summer.
“While this is not going to improve housing affordability, we are likely to see buyers’ nerves calmed, and demand improve. If inflation does start to recede in the longer-term, rates will resume their downwards trajectory. Either way, the market needs to be ready to cope with a spike in demand as pent-up demand is uncorked.
This is not currently the case. Backend infrastructure is still reliant on inefficient, fragmented legacy systems that are simply not built to deliver the speed and certainty needed to progress transactions at the scale the economy needs, nor cope with any surges in activity.
And while the Government’s forthcoming response to its consultation on Home Buying and Selling is likely to drive positive change, improving the process, we need a holistic approach that places as much emphasis on streamlining completion as it does on securing a home and a mortgage.”
Richard Pike, sales and marketing director at Phoebus Software, said:
“A decision by the Bank of England to hold the base rate was widely expected, particularly following yesterday’s inflation figures. Markets had largely priced in the decision, and lenders have been competing strongly for business.
Looking ahead, much will depend on whether inflation continues to ease over the coming months. Recent falls in oil prices following developments in the Middle East could help reduce some inflationary pressures further down the line, potentially giving the Bank more room to continue its gradual easing cycle. But for now, holding rates steady represents a sensible balance between supporting growth and maintaining confidence that inflation will return sustainably to target.
The underlying picture for the housing market remains positive. Demand has proven resilient, lenders are continuing to innovate, and competition is supporting attractive mortgage pricing. The challenge for many borrowers is no longer simply the cost of borrowing, but affordability and access to the right products.”
Martin Sims, Distribution Director at Molo, commented:
“The Bank’s decision to hold rates feels like the most sensible outcome, given where the market is at the moment. Inflation is still above the Bank of England’s 2 per cent target, growth is not exactly racing away, and there are enough global and domestic pressures in play to make keeping a steady hand the obvious call.
For brokers and landlords, though, a hold does mean no change at all. The market has already had to adapt to higher funding costs, tighter affordability and a more cautious investor mindset. We are not in a place where people can just assume rents will keep rising, and the numbers will look after themselves.
That is why the broker conversation has become much more detailed. Location, tenant demand, property type, rental strength and exit strategy all carry more weight than they did. In many cases, the useful work is being done before the application even lands, in how the deal is shaped and whether the income is genuinely sustainable. And this is only likely to continue in a more settled economic environment.
At the same time, lenders have continued to respond to improving market conditions where they can. We have seen pricing become more competitive in parts of the market over recent months, which is helping to create opportunities for brokers and investors even without a change in Bank Rate. The focus now is less on where rates move next and more on how borrowers make the most of the options available to them.”
Matt Smith, Rightmove’s mortgage expert says:
“Today’s decision to hold the Base Rate will give some welcome short-term certainty to movers, and some recent easing in geopolitical tensions has helped to improve market sentiment, though the outlook remains sensitive to global events. There is now more limited pressure for mortgage rates to increase, and we may see lenders continue to gradually reduce rates in the coming weeks if this stability continues, with the average two-year fixed rate currently just above 5%.
However, borrowing costs are still higher than many buyers have been used to, and remain a key factor shaping market behaviour. Our latest House Price Index shows that asking prices have dipped this month, with sellers responding to more price-sensitive buyers and increased competition.”
Adam Bovingdon, Managing Director – Real Estate Finance – United Trust Bank comments:
“As expected, the Bank of England held Bank Rate at 3.75% today. The decision comes on the back of encouraging economic data this week, with inflation holding at 2.8%, below expectations of 3.0%, and unemployment edging down to 4.9%, suggesting the economy remains relatively resilient despite global uncertainty.
For housebuilders, developers and property investors, today’s decision provides stability at a time when confidence is much needed. While challenges around viability, affordability and planning remain, easing inflation helps support expectations that interest rates will gradually reduce over time, providing an improved backdrop for development and investment activity.”
Nick Leeming, Chairman of Jackson-Stops, comments:
“The Bank of England’s decision to hold interest rates will be welcomed by many buyers and homeowners who have spent recent months navigating an increasingly uncertain economic landscape.
While borrowing costs remain significantly higher than the levels seen in recent years, today’s decision provides a degree of consistency at a time when households and businesses continue to face wider economic pressures. Against a backdrop of ongoing geopolitical tensions and global market uncertainty, maintaining rates gives buyers greater confidence to plan and make informed decisions without the prospect of immediate further increases.
For the housing market, stability is often just as important as affordability. Many buyers have already adjusted their expectations to the current interest rate environment, and a period of policy consistency allows confidence to build gradually across the market.
While transaction levels may remain measured in the months ahead, holding rates should help avoid additional pressure on affordability and support continued activity among buyers and sellers. The market remains highly needs-driven, with people continuing to move for work, family and lifestyle reasons, and today’s decision provides a more predictable backdrop against which those decisions can be made.”
Ben Thompson, Director of Home Moving Strategy, Mortgage Advice Bureau:
“A second consecutive rate hold provides further reassurance to borrowers, providing a sustained period of stability for those looking to buy, remortgage, or move home. For first time buyers, a hold provides greater confidence when budgeting for mortgage repayments, and may encourage more people to move forward with their homebuying plans.
Our research found that 41% of prospective buyers are waiting for a ‘sign’ before taking the next step, and a sustained period of rate stability could provide some of the reassurance they’ve been looking for.
Even though we know we have a new wave of inflation and price pressure coming through because of the Iran conflict, the greater concern is likely to be the slow pace of economic growth. This means the outlook for mortgage rates may well soften now, as base rate cuts start to look more likely.
For borrowers approaching the end of their current mortgage deal, the key message is to review your options early. While many are coming off historically low fixed-rate products and may face higher repayments, lenders continue to compete for business, and there are competitive deals available for those who are well prepared. As always, seeking expert mortgage advice remains crucial to securing the most suitable deal for your circumstances.”
Jason Tebb, President of OnTheMarket, comments on the interest rate hold:
“As was widely expected, the Bank of England has voted to hold interest rates at 3.75 per cent for another month. With inflation holding firm at 2.8 per cent in the 12 months to May, this took a bit of pressure off the rate setters who chose to continue with their ‘wait and see’ approach, although two members voted for a quarter-point increase this time around.
Although inflation is still above the Bank’s 2 per cent target, and is expected to edge higher on the back of inflationary pressures created by the Middle East conflict before it comes down, the Bank has to balance that risk with avoiding squeezing businesses and consumers who have already been hit by a rise in energy prices.
While interest rate cuts have been hugely important in boosting buyer and seller confidence over the past couple of years, a further hold suggests a continued steadiness and stability, which in these uncertain times is no less welcome.
With lenders continuing to ease mortgage rates on the back of lower Swap rates, there is cause for optimism among borrowers. As ever, many people simply need to move – especially if they have repeatedly been put on hold due to pre-Budget speculation, and geopolitical concerns – and these are proceeding with their transactions.”
Lorna Hopes, mortgage specialist at the chartered financial advisers Smith & Pinching, commented:
“The clouds on the Bank of England’s horizon haven’t lifted, but they have got lighter.
“The inflationary surge everyone had feared still hasn’t arrived. At 2.8%, CPI is well above the Bank’s target, but crucially it didn’t get any worse in May. Even though there’s plenty of scope for it to tick up in coming months, the danger of it soaring out of control has receded.
That’s why the Bank feels no immediate need to ramp up interest rates to tame inflation. Two members of the Bank’s ratesetting committee voted for a rate rise now, but a clear majority opted to wait and see. If the inflationary picture improves over the next few weeks, any rate rise is likely to be delayed even further.
Mortgage swap rates, which determine how mortgage lenders price their fixed rate loans, now suggest there will be no more than one base rate rise in the second half of 2026. Just a few weeks ago, they were predicting at least two – so this is great progress for mortgage customers.
Borrowers are already starting to see fixed interest rates tick down, and in the coming weeks lenders are likely to cut their rates further in an effort to win business.
The return of more affordable mortgages could help kickstart the property market as well, which slowed as conflict-related uncertainty led many would-be buyers and movers to put their plans on hold in recent months.
Things are a long way from the settled position they were in at the start of the year, but the progress back to normality is real and happening faster than many imagined.”
Lorna Hopes, mortgage specialist at the chartered financial advisers Smith & Pinching, commented:
The clouds on the Bank of England’s horizon haven’t lifted, but they have got lighter.
The inflationary surge everyone had feared still hasn’t arrived. At 2.8%, CPI is well above the Bank’s target, but crucially it didn’t get any worse in May. Even though there’s plenty of scope for it to tick up in coming months, the danger of it soaring out of control has receded.
That’s why the Bank feels no immediate need to ramp up interest rates to tame inflation. Two members of the Bank’s ratesetting committee voted for a rate rise now, but a clear majority opted to wait and see. If the inflationary picture improves over the next few weeks, any rate rise is likely to be delayed even further.
Mortgage swap rates, which determine how mortgage lenders price their fixed rate loans, now suggest there will be no more than one base rate rise in the second half of 2026. Just a few weeks ago, they were predicting at least two – so this is great progress for mortgage customers.
Borrowers are already starting to see fixed interest rates tick down, and in the coming weeks lenders are likely to cut their rates further in an effort to win business.
The return of more affordable mortgages could help kickstart the property market as well, which slowed as conflict-related uncertainty led many would-be buyers and movers to put their plans on hold in recent months.
Things are a long way from the settled position they were in at the start of the year, but the progress back to normality is real and happening faster than many imagined.”
