Mortgage market welcomes Bank of England holding rates

Mortgage brokers welcomed the Bank of England's decision to hold interest rates on Thursday, while warning that borrowers will still likely see their mortgage rates increase.

The Bank of England voted  6-3 to hold interest rates at 3.75% on Thursday but governor Andrew Bailey said in a statement that higher energy costs mean a future increase is more likely.
On Wednesday, the US Federal Reserve hiked rates for the first time in more than three years.

While brokers saw the bank's decision to hold as the right one, they said the expectation of future interest rate rises means that mortgage rates are likely to keep moving ahead of the bank.

“The decision to maintain Bank Base Rate at 3.75% is welcome, particularly as there had been a growing expectation in recent weeks that the MPC might have felt this was the time to act,” said Ben Allen, managing director at The Right Mortgage & Protection Network. “If we have avoided a rise today, there will inevitably be a question over whether it has simply been postponed.”

Steve Cox, chief commercial officer at Fleet Mortgages also flagged the pressure the BOE is under to act.

He warned borrowers that the Bank’s decision to hold should not be interpreted as meaning that product rates will stand still, as lenders have already had to respond to higher swap rates and funding costs.

“Mortgage pricing has effectively been moving ahead of the MPC, although the need for some lenders to build business volumes during the remainder of 2026 could provide some counterweight to those funding pressures,” he said.

“For landlords approaching a refinance there is clearly a need to act, but purchasing landlords should also think carefully about simply waiting for rates to improve, because there is no guarantee they will.

"Exploring what is available now, and working with an adviser to understand those options, appears far more sensible than trying to predict exactly where pricing might be several months from now.”

Mark Harris, chief executive at mortgage broker SPF Private Clients, highlighted that several lenders are already increasing rates on their two- and five-year fixes.

“Mortgages are growing more expensive and affordability concerns remain, although swap rates have eased today after rising in recent days,” he said. "Independent advice is more important than ever, as is securing a rate as soon as possible with the option of reviewing it before completion to see whether there is a better product available at that time."