The Bank of England has voted to keep UK interest rates on hold at 4% following its latest Monetary Policy Committee (MPC) meeting, with four members voting for a cut and five opting against.
The decision means borrowing costs remain unchanged as policymakers weigh signs of easing inflation against uncertainty over the government’s upcoming Budget.
Prices across the UK economy rose by an average of 3.8% in the year to September — almost double the Bank’s 2% target, but slightly below the 4% rise many economists had expected.
While inflation is moving in the right direction, the Bank said it was not yet ready to reduce rates, preferring to wait for more clarity on how Chancellor Rachel Reeves’s Budget on 26 November could influence growth and spending.
However, the latest data and tone from the MPC have raised expectations of a potential rate cut in December, if inflation continues to ease and the economy shows further signs of slowing.
Industry response:
Nick Leeming, chairman of Jackson-Stops: “The decision to hold interest rates at four per cent reflects the Bank of England’s need to stem inflation with ongoing caution towards economic growth. This wait and see position is one familiar with many homebuyers at the moment, keen to know what the Chancellor’s final decisions are on tax and spending policies before committing to a move.
“However, this might have been an opportunity missed by the Bank of England’s rate setting committee, in which a 25 basis points drop would have given the lending market a much-needed boost during this November lull. If budget tax rises harm growth, we may see interest rates cuts being used in the future to support greater market movement.
“Earlier this week lenders hedged their bets on a rate cut, with Nationwide reducing mortgage rates by up to 0.25 percentage points, offering the lowest two-year fixed rate since 2022. Moves such as this will be welcome by the mortgaged majority, with the hope they won’t be short lived. Some mortgage rates remain more than double the level they were before the pandemic, with house prices rising 26%* during the same period.
“The slow pace of building is also a concern, with chronic undersupply keeping house prices high. Inflated costs and interest rates are impacting growth in the development sector, especially SMEs, leaving government targets unmet. Greater financial headroom may have been a welcome boost to those struggling to make the numbers work.”
Matt Smith, Rightmove’s mortgages commentator: “Ahead of one of the most widely anticipated and discussed Autumn Budgets of recent times, it was unlikely the Bank would go for another interest rate cut so close to the announcement and has opted for stability instead. There’s still a good chance of a rate cut before the end of the year, depending on what is announced in a couple of weeks’ time, and if not then we’re looking at early 2026.
“Some good news is that the cost of financing mortgages has actually come down in recent weeks. We’ve started to see some lenders become more competitive in certain segments of the mortgage market in recent days, and offer some headline-grabbing cheaper rates, as they look to secure some final business before the end of the year.
“The average two-year fixed mortgage rate is now 4.44% – down from 4.95% at this time last year. The downward trend is good, but mortgage rates have come down more slowly than many were predicting at this time last year. Rates have come down even more slowly for five-year products. With the uncertainty surrounding how the upcoming Budget will impact people’s finances, another rate cut soon followed by some notable reductions in mass-market mortgage rate products would be a big boost to home-mover sentiment and affordability.”
“Regardless of the decision made today, we’ve recently seen lenders introduce new products and policies aimed at higher-income borrowers and larger loans, which is encouraging for the London market – particularly in the Richmond Borough.
“Although many have spoken about a market where not much is going on, which meant we were expecting a very quiet November in the run-up to the Budget, that hasn’t been the case. We’ve agreed a high number of sales – mainly freehold homes – with prices reaching up to £2.5 million.
“It may be that some buyers are moving now to hedge their bets in case the Budget proves less property-focused than expected. A measured Budget and a rate cut early in 2026 would be the ideal combination to unlock more momentum in the market.”
Kevin Shaw, national sales MD, LRG: “No one will be surprised that the Bank of England has chosen to hold interest rates. With the Budget less than three weeks away, perhaps the Bank sees the need for some stability. And it would have been a brave move to change course in such a situation.
“There’s been so much speculation around the 26 November Budget that it’s taken on the status of a political event as well as a fiscal one. The last time we saw something of similar magnitude was the general election of July 2024. Back then the Bank also opted for caution despite the data signalling the need for a base rate reduction. It’s clearly sticking to the same approach.
“The Bank’s reasoning is sound. Inflation has remained stubbornly at 3.8% for two consecutive months – not something to panic about, but not yet at the target level at which to relax either. With so much depending on what the Chancellor unveils later this month, holding steady is the least disruptive choice.
“For the property market, today’s decision means continued stability for buyers and sellers.
“Perhaps on 18 December, when the Monetary Policy Committee next meets, with political uncertainty out of the way and inflation data moving in the right direction, we may see a reduction …well timed for Christmas.”
Nathan Emerson, CEO of Propertymark: “Following four rate cuts since August 2024, today’s decision to hold interest rates reflects the Bank of England’s cautious approach in an uncertain economic climate. Stability can be reassuring for the housing market, giving buyers and sellers a clearer sense of direction after months of volatility.
“However, for many, affordability remains stretched, and the market would benefit from further easing when conditions allow. Sustained rate stability or a gentle reduction in the months ahead would help bolster consumer confidence and keep transactions moving.”
Simon Capp, head of residential sales, British Land: “The decision to hold interest rates is disappointing, especially given the better-than-expected inflation figures in September. While there has been a flurry of activity following the summer months, a decision to cut the rate today would have given the residential market a welcome boost as we head into the typically slower Christmas period, especially given heavy speculation in the lead up to the autumn budget. Despite market headwinds, quality central London residential property is a robust commodity. From our sales data we see an ongoing predominance of purchasing activity from owner occupiers, seeking long-term ownership.”
Andrew Lloyd, MD at Search Acumen: “Today’s decision to hold interest rates at 4% reflects the Bank of England’s continued caution in balancing growth against inflation, that, while stable, remains elevated at 3.8%. Stability in borrowing costs is welcome, particularly as the market awaits the Chancellor’s Budget later this month, but holding rates steady will do little to reinvigorate activity across the property market in the short term.
“The government is consistently missing its housing targets, where an interest rate cut would have been a major boost to help UK developers reduce borrowing costs, stimulate buyer demand, improve project viability, and increase developer confidence. Lower financing costs to ease these margins, particularly with smaller housebuilders, could have been a real win at a particularly vulnerable time for the sector.
“Looking ahead, for real estate investors, dealmakers, and lenders alike, confidence will depend on clear signals from both monetary and fiscal policy. The Budget could be that signal, but until then the cautious ‘wait and see’ mindset of many market participants is likely to persist. If inflation starts to move downwards, we could see further monetary policy easing later this year, which, paired with political stability and renewed investor appetite, would help unlock a more active property market heading into 2026.”
Nicholas Mendes, head of marketing, John Charcol: “The Bank of England has kept Bank Rate at 4.0%, choosing patience over pre-emption. Inflation is falling faster than expected, with CPI at 3.8%, wage growth easing, and the labour market clearly softening. However, the Monetary Policy Committee has opted to wait for the Chancellor’s Budget later this month, where up to forty billion pounds of tax rises could alter the balance between growth and inflation.
“It is a pragmatic decision by the Bank, knowing that tighter fiscal policy could do part of its job for it, pulling inflation lower in 2026 without the need for another rate cut now. For the moment, policymakers appear comfortable that monetary policy is restrictive enough and that disinflation is well established across the economy.
“Holding steady also gives the Bank time to test whether the current slowdown is temporary or something deeper. Consumer spending remains subdued, business investment patchy, and mortgage approvals are only just starting to recover. By waiting, the Bank can see whether underlying momentum stabilises through winter before deciding whether to ease in the new year. For borrowers, it is a sign that while we are past the peak, the Bank is determined not to move faster than the data justifies.”
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