Bank of England decision to maintain interest rates at 4.5% – Thoughts from the Industry
With the Bank of England decision to maintain interest rates at 4.5% here are some thoughts from the Industry
Matt Smith, Rightmove’s mortgage expert:
“Now that this expected interest rate hold is out of the way, all eyes are on May’s decision where the current forecast is a second cut of the year. Since the last decision in February, average mortgage rates have trickled downwards slightly but pretty much stayed flat. We’re seeing lenders try to price competitively where they can to capture business during some of the busiest months of the year for home-moving. However, there currently isn’t much wiggle room for lenders to offer cheaper rates, and hopefully a second cut can spur forward another wave of falling rates, and bring average rates closer to 4% rather than 5%.
“Some lenders may have also priced their products to manage volumes of new cases, as they try to protect their operational capacity at the start of the year to process as many completions as they can ahead of the Stamp Duty deadline. As the Stamp Duty deadline will pass soon, they could then release this capacity, and as a result we may see some lenders start to price even more competitively.”
Kevin Shaw, National Sales Managing Director, LRG:
Today’s decision by the Bank of England to hold interest rates was not a surprise, but it was a disappointment.
At LRG we’ve had a strong start to 2025 but we are aware that the increased sales figures (year-on-year) are in part at least, due to a rush to beat the imminent Stamp Duty increase.
Across the wider economy a loosening of monetary policy would have counter-balanced the recent fiscal tightening of which the Stamp Duty change is a component.
With the ECB’s interest rate now at 2.5% after a further reduction last week, the gap between the Bank of England and the ECB rates is continuing to widen. Additionally, few mortgage deals are currently below 4%. The MPC was too slow to put rates up in 2022 and is increasingly looking too slow in reducing them now.
The government’s favourite word seems to be growth, and yet in the wider economy growth seems nothing more than an aspiration. To seriously changes things up – specifically in housing delivery – monetary policy must align with the government’s objectives.
The current level of interest rates act as a handbrake on future growth. Take the handbrake off and the housing market and economy will gain some momentum.
With monetary policy having failed to mitigate the increased cost of buying a home (due to the rise in Stamp Duty), we are looking to next week’s Spring Statement for the Government’s next move.”
Nathan Emerson, CEO of Propertymark:
“Today’s news will likely prove encouraging for many people who are hoping to progress on the housing ladder. It is reassuring to see the base rate held, especially considering the many national and international factors that continue to shape the global economy currently.
“With inflation currently standing at 3 per cent, which is above the initially targeted rate by the Bank of England, it important there is very careful consideration over the forthcoming months to keeping the economy heading on the right pathway. Higher interest rates can of course affect mortgage products that are on offer, so it would always be welcome to see base rates lower when the wider economy fully allows.”
Daniel Austin, CEO and co-founder at ASK Partners:
“The Bank of England’s decision to hold interest rates steady reflects the ongoing balancing act amid Trump-driven market uncertainty, tariff policies, and the UK’s upcoming tax changes. The broader effect will hinge on how quickly lenders adjust mortgage rates and whether this holding pattern persists. For homeowners and prospective buyers, the appetite for lower rates, which should, in theory, make mortgages more affordable, is increasingly evident. Yet, with fixed mortgage rates staying stubbornly high despite earlier signs of easing, any immediate relief may be limited. Still, a more stable rate environment could gradually restore buyer confidence, particularly among those who’ve been holding back, waiting for clearer signals.
“For investors and developers, the path to rate cuts will be pivotal. Demand remains resilient, particularly in high-growth sectors like co-living and build-to-rent, where supply constraints continue to attract capital. As we approach a potential shift in government policy and economic direction, real estate stakeholders must stay nimble. Should rates fall, as some predict, this could spark a more sustained recovery in transaction volumes and investment flows. However, with uncertainty still looming, strategic financial planning remains essential to navigating the evolving landscape.”
Tim Parkes, CEO of RAW Capital Partners:
“With inflation expected to continue to rise throughout Q2, and ongoing geopolitical turbulence across Europe, the US and the Middle East, the markets had priced a 95% chance that the Bank of England would hold the base rate today, so the decision comes as no surprise. Following February’s cut, the MPC committed to a ‘careful’ approach, and markets now anticipate only a 0.5% reduction to the base rate by year-end.
“Naturally, this will disappoint brokers and borrowers across the UK property market. But the market will swiftly adjust to the new base rate forecasts, and it is important to note that, even though interest rates are not falling as fast as some thought they would, the property market has enjoyed a strong start to the year – houses prices are up amid a surge in buyer demand and elevated transaction levels. This suggests the market is progressing, not merely treading water.
“For lenders, recognising the market’s appetite to invest will be crucial in the coming weeks and months. Investors and homebuyers are actively pursuing opportunities, so fixating on the latest MPC decision is unproductive. Instead, lenders must adapt, meet borrowers where they are, and focus on delivering the highest level of service – even if they can’t slash rates just yet.”
Alpa Bhakta, CEO of Butterfield Mortgages Limited:
“While property investors were hoping for a rate cut, the economic climate and property investment outlook are in a much better position than in previous years. It’s important to remember, the upcoming Spring Budget and new tax year could influence market conditions and introduce some uncertainty. As such, it’s essential for lenders to stay proactive, supporting borrowers and brokers, to ensure the market can capitalise on its strong start to the year.”
Sarah Thompson, Managing Director, Mortgage Scout:
“The Bank of England’s decision to hold the base rate at 4.5% today was widely expected, but it highlights the need for caution in a confusing economic landscape. Inflation remains above target and is forecast to rise to 3.75% later this year, while global instability – from trade tensions in the US to ongoing geopolitical risks- continues to create uncertainty.
“While the European Central Bank has already moved to cut rates, the UK remains on hold for now, with expectations of two or three reductions before the year’s end. Despite this, mortgage rates remain competitive, with some five-year fixed deals, such as HSBC’s 3.98%, now sitting below the Bank of England’s base rate. This suggests that lenders anticipate rate cuts in the coming year, providing borrowers with opportunities to secure long-term stability.
“It’s also important to consider the bigger picture—while recent rate increases have been challenging for many, the average mortgage interest rate in the UK from 1995 to 2022 was 5.62%. In that context, today’s rates are not as extreme as they might feel, particularly for those who entered the housing market during a period of historically low borrowing costs.
“Lenders are also introducing more flexible options, such as Virgin Money’s five-year fixed rate with no early repayment charges after two years, should you move to an alternative product. As the market continues to adjust, borrowers will need to consider all available options to manage costs effectively and plan for the future.
“Brokers are experts in the nuances of mortgages, able to assess your personal circumstances and help you navigate both your financial situation and changes in the mortgage market. I would always suggest speaking to a broker before making decisions to ensure you have the full picture and access to the best possible options.”
Isaac Stell, Investment Manager at Wealth Club:
“The Bank of England has opted to keep interest rates at 4.5% in March after having cut by 0.25% in February. With annual inflation reaccelerating in January the BoE is adopting a wait and see approach.
Any decision to cut interest rates moving forward will likely be finely balanced between dampening inflationary pressures whilst remaining wary of weakening economic growth. With the upcoming rise in national insurance contributions for businesses coupled with rising prices for consumers, the squeeze on taxpayers will continue to be keenly felt. With growth prospects diminishing by the day, and the Spring Statement likely to unleash further pain, many may be asking why the BoE isn’t trying to get ahead of the curve by cutting rates faster.
However, it is not only the domestic front that is throwing up challenges for the Bank of England. The tariff war instigated in Washington is adding to the list of global pressures, with the MPC having to factor an erratic US president into its decision making. Despite the nuance involved in the BoE decision making process, those feeling the pinch aren’t likely to have any sympathy given the looming threat to both incomes and prices. With consumer and business confidence in the doldrums the bold move would be to cut rates and alleviate some near-term pain. “Fortune favours the brave.”
Paresh Raja, CEO of Market Financial Solutions:
“The past six months have shown that predicting base rate movements is never straightforward. The hope had long been that once inflation was brought under control, the Bank of England would rapidly reduce rates. But this was over simplistic; it overlooked the myriad other factors at play – economic and politically, domestically and internationally, the landscape is constantly evolving, and while further cuts to the base rate are still expected this year, it is likely that the central bank will remain cautious. Today’s decision reflects that.
“Where the property and mortgage markets are concerned, it is important that neither complacency nor inertia are allowed to set in. Sitting tight in the assumption that rates will tumble could prove risky. With data showing that house prices and buyer demand are on the rise, the market will clearly move ahead. So, the focus from lenders when serving brokers and borrowers has to be on delivering products and services that give clients the confidence to act in the here and now, with flexibility and optionality remaining key qualities in achieving this.”
Darrell Walker, Group Sales Director at ModaMortgages:
“The market widely expected a hold today, and with analysts forecasting at least a 0.5% reduction in the base rate by the end of 2025, this decision is unlikely to slow activity.
“Indeed, while borrowing costs remain a challenge for some, landlords haven’t stopped investing. Instead, they are being pragmatic; they have recalibrated, adjusting both their budgets and the types of assets they are targeting. We expect this trend to continue following today’s news, and we have seen many landlords using the current period of stability to diversify their portfolios, with HMOs and MUFBs proving particularly popular.
“As ever, speculation is rife as we head into next week’s Spring Statement and, beyond that, the start of a new tax year. With this in mind, rather than focusing on when the next cut might come, lenders should prioritise agility, ensuring brokers and their clients have both the products and support they need to get deals over the line.”
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