UK interest rates have been held at 3.75% for a fifth time by the Bank of England as it continues to tread a cautious path in an uncertain global political and economic climate.

Its Monetary Policy Committee (MPC) agreed to keep the rate at its lowest level since February 2023, in efforts to keep inflation down. The latest official figures show inflation in the UK was 2.6% in the year to June, down slightly on the previous month but still above its 2.3% target.

However, landlords will have noticed that while buy-to-let mortgage rates fell through June and early July they have started edging back up in recent weeks as lenders responded to rising swap rates, ahead of today’s announcement. It means that inflation figures and the geopolitically driven rise in rate expectations have roughly cancelled each other out.

Analysts suggests the possibility of the next change being a rise, particularly as the vote was split this time by a majority of six–three to maintain the rate at 3.75% while three members voted to increase it by 0.25 percentage points, to 4%.

Welcome

Property and finance experts agree that today’s decision to hold gives the housing market another period of welcome stability.

“Holding the base rate at 3.75% is the right call,” says Joshua Elash, founding director of specialist lender MT Finance. “Last week’s fall in inflation was a welcome surprise and Andy Burnham and John Healey should be given time to start implementing their economic vision before the Monetary Policy Committee makes any changes.

“The combination of a static base rate and lower inflation should help to inspire confidence among both lenders and borrowers.”

Signal

The news isn’t a signal that rate cuts are back on the table, warns Sarah Thompson, group financial services director at Mortgage Scout, part of LRG (pictured). She says the current inflation figure doesn’t yet reflect the increase in the energy price cap due later this year, and the Bank has been clear that it expects inflation to tick back up as a result.

“Our advice to anyone refinancing before the end of the year is simple: act now,” advises Thompson. “Reserving a rate today costs nothing and commits you to nothing – if rates improve before your deal completes, you can still move to a better option. But if rates rise, as we think they may, you cannot go back and secure the rate that has already gone. Preparation, not delay, is what puts borrowers in control.”

The next MPC vote date is 17th September.

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