Mortgage market expected to remain steady as policymakers hold rates amid persistent inflation
The Bank of England (BoE) has announced that it will keep its base interest rate unchanged at 4%, a move widely anticipated by financial markets and mortgage professionals who have been closely monitoring inflation data and wage growth figures.
Money market indicators suggested there was little expectation of a rate cut at this month’s meeting, and analysts believe the central bank is unlikely to lower rates further in the near term.
“The Bank of England’s hold decision was widely expected,” said Nicholas Mendes, head of marketing at London broker John Charcol. “Markets had positioned for it, and swaps had already priced it in, so today’s decision on its own is unlikely to shift mortgage pricing.”
Inflation continues to exceed the bank’s 2% target, with the most recent figures showing annual inflation at 3.8%. Wage growth, which stood at 4.8% in July, has added to concerns about inflation remaining above target.
The Monetary Policy Committee voted by a majority of 7-2 to keep interest rates at 4%.
— Bank of England (@bankofengland) September 18, 2025
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“We expect no more rate cuts this year or next,” said Rob Wood, chief economist at Pantheon Macroeconomics. Sanjay Raja, chief UK economist at Deutsche Bank, added: “For now, we stick to our call for one more rate cut to end the year with two more rate cuts pencilled in for 2026. But the likelihood of a protracted pause, or indeed a higher terminal rate, has increased.”
For the mortgage sector, the bank rate remains a key factor influencing lenders’ pricing decisions. Fixed-rate mortgage rates have seen minor adjustments since the previous MPC meeting, but further changes will depend on future signals from the bank and economic data.
“For mortgages, a well signposted hold is already in the price,” Mendes said. “I do not expect major reductions or a new burst of competitive repricing from lenders before the next couple of meetings.
Gareth Lewis, deputy chief executive of specialist lender MT Finance, however, believes that the latest base rate cut may create stronger demand for alternative financing solutions such as bridging loans. “A measured approach is key, and we anticipate that a rate reduction is on the horizon as inflationary pressures continue to ease,” he added.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said today’s rate hold “is okay, as it provides stability and is far preferable to a rate increase.”
“However, a drop in rates is required to give a boost to affordability which remains a brake on the housing market,” she pointed out. “For a real impact, we need the next reduction to be a half-point cut, rather than a quarter point.
“Never in my 25 years in the industry have I had so many conversations with people about the cost of stamp duty. The high cost of moving is prohibiting many from taking the plunge; people want to move but don’t feel confident enough to do so, which is causing stagnation in the market in some areas.”
Gautam Pandey, director and founder of buy-to-let specialist lender Quantum Mortgages, noted that the forward guidance from the BoE is gradual and careful depending on the underlying data.
“Markets are expecting probably one cut in the near future,” he said. “The Autumn budget and its fiscal implications will be something to keep an eye out along with autumn inflation numbers.”
If we see a cut this year, Mendes said, December still looks the most plausible window. “That gives borrowers room to secure a product now without worrying about missing a sharp sudden short-term drop-in rate,” he stated.
The BoE’s rate decision today follows recent moves by other central banks. The US Federal Reserve lowered its benchmark rate to a range of 4% to 4.25% earlier this week, while the European Central Bank kept its rate at 2%.
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