Bank of England holds interest rates at 3.75%
The Bank of England has announced its decision to hold the base rate at 3.75%.
This decision comes as a result of wider economic uncertainty and inflation (CPI) increasing to 3.3% in March and remaining above the Bank’s 2.0% target.
Here are some thoughts from within the property industry.
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.”
Nathan Emerson, CEO at Propertymark, comments:
“With inflation still above the Bank of England’s 2 per cent target, a decision to hold interest rates at their current level reflects a cautious and balanced approach. Policymakers will be keen to ensure inflationary pressures continue to ease before making any significant changes to borrowing costs.
“For homeowners, buyers and sellers, today’s decision provides a degree of stability and certainty. While borrowing remains relatively expensive compared with recent years, holding rates steady avoids adding further pressure to household budgets and gives the housing market an opportunity to adjust.
“Many families are still recovering from the higher cost of living and elevated energy bills experienced over the past few years. If inflation continues to move in the right direction, there is growing hope that confidence will strengthen, helping to support increased activity across the property market and making home ownership more achievable for many.”
Managing Director of Sales for Foxtons, James Stevenson, commented:
“Today’s decision was widely expected and reflects continued caution from the Bank of England as it balances the need to support economic growth against lingering inflationary pressures. Whilst rates may not have fallen at the pace many anticipated, the UK property market has remained remarkably resilient, with values holding up well compared to this time last year.
We’re seeing a market of committed buyers. The people getting in touch are serious, well-researched and ready to move. For anyone waiting for the perfect rate climate, the wait carries its own risk. Even if you could time the bottom, lower rates bring buyers back all at once, and that competition is what costs you the home you want.
For sellers trading up, a softer market is your friend. If prices ease, the larger home you’re buying tends to fall by more in pounds than the one you’re selling, so the gap you actually pay to move up shrinks. That gap is what matters, not the headline figure on either side.”
Verona Frankish, CEO of Yopa:
“Today’s decision to hold the base rate comes as little surprise and, importantly, it provides a further period of stability for homebuyers and sellers alike.
The property market has demonstrated remarkable resilience so far this year, with buyers continuing to transact despite higher borrowing costs than many had become accustomed to prior to 2022. Whilst a rate cut would undoubtedly have provided an additional boost to sentiment, consistency and predictability remain valuable in their own right.
With inflationary pressures yet to disappear entirely, a measured approach from the Bank of England is understandable and we expect the market to maintain its current level of momentum as a result.”
Jonathan Samuels, CEO of Octane Capital:
“Another hold was the overwhelming expectation and the Bank of England has once again opted for caution over commitment.
Whilst inflation has eased considerably from its peak, policymakers remain mindful of the risks associated with moving too quickly and today’s decision reflects that balancing act.
The challenge now is less about the direction of travel and more about the pace. Markets are increasingly comfortable with the idea that rates will fall further over time, but continued uncertainty around when those reductions might arrive risks dampening confidence across borrowing-dependent sectors. Stability is welcome, but clarity is equally important.”
Chris Hodgkinson, Managing Director of House Buyer Bureau:
“Today’s decision is unlikely to come as a disappointment given that a hold was already widely anticipated, but neither will it provide much of a catalyst for those waiting on the sidelines.
The housing market has continued to function despite elevated borrowing costs, however many buyers and sellers remain highly sensitive to affordability and are looking for stronger signals that mortgage rates will ease further over the months ahead.
For now, the Bank of England has chosen to prioritise stability and that’s understandable given the wider economic backdrop. But until we see a more meaningful reduction in borrowing costs, market activity is likely to remain driven by necessity rather than confidence.”
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.”
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.
You May Also Enjoy
Bank of England holds interest rates at 3.75%
Property valuation leads to agents up 55%
Britain’s equestrian homes average value of £1.3m
Interest-only mortgage stock reduces by 17 per cent in 2025
5 building materials that give home sellers nightmares
