The Bank of England’s Monetary Policy Committee (MPC) has announced that the base rate will remain at 4.5% in their latest decision today. This follows three consecutive reductions in the base rate of interest since August 2024, but was largely expected due to a rise in inflation during the first quarter of 2025.
In August 2024, the base rate sat at 5.25%, the highest the UK had seen for over a decade. The MPC announced their first in a series of 3 cuts in August 2024, to 5%, followed by another cut to 4.75% in November, and finally in February 2025, to 4.5%.
However, while inflation is currently much lower than at its most recent peak of 11% in 2022, it rose from the target rate of 2% back up to 3% in January 2025. The Bank of England has forecast that it could also rise further in the coming months, with an expectation that it may hit 3.75% by the third quarter of 2025.
What does this mean for mortgages?
How the base rate impacts your mortgage will depend on the type of mortgage you have. For the vast majority of mortgage holders who are on a fixed-rate product, around 80%, there will be no immediate impact, unless they are due to remortgage.
Likewise, homeowners on a tracker-rate product, which is directly impacted by the base rate, will see no change in their monthly repayments. Those on other variable-rate mortgages, such as an SVR (standard variable rate) may experience a delayed rate rise, depending on how their lender reacts to this news. However, most lenders will already have factored the lack of base rate reduction into their current rates and immediate plans.
For first-time buyers and those needing to remortgage imminently, a stagnant base rate will be disappointing, as it indicates that rates are likely to remain higher for longer.
What rates are available right now?
The vast majority of mortgage lenders have already factored in the base rate holding at 4.5% when pricing their current product ranges, as it was widely expected. Therefore it’s unlikely that there will be any major changes to the average fixed mortgage rates in the near future.
The Interest rates available vary depending on their type. Fixed rates with a longer introductory term are often priced higher than shorter term fixes and variable rates typically priced lower than fixed rates due to the lack of stability. However, the circumstances of the borrower, and the size of their deposit is also a big factor.
A representative example of rates currently available to those with a 35-40% deposit can be seen below:
|
Mortgage Lender |
Rates available at 60-65% LTV |
Product types available within this range |
|
3.99% to 5.84% 4.15% to 5.41% |
2, 3, 5 and 10-year fixes & 2-year tracker mortgages 2 and 5-year fixes & 2-year tracker mortgages |
|
|
3.94% to 5.99% |
2, 3, 5 and 10-year fixes & 2-year tracker mortgages |
|
|
4.10% to 5.04% |
2, 3, 5 and 10 year fixes and 2 year tracker mortgages |
These rates were sourced on March 20 2025, but can change at any time.
Kellie Steed - Content Writer
Our analysis
The industry at large predicted the unchanged base rate, so it’s unlikely to cause much of an immediate impact on mortgage rates across the market. However, it’s difficult to predict what will happen after the next MPC meeting, which is set for Thursday 8 May 2025. Following the last cut back in February, Andrew Bailey, governor of the Bank of England noted that "a gradual and careful approach" would be taken when considering future cuts. This certainly seems to have rung true with this announcement.
If the base rate remains at 4.5% in May there may be some stabilisation in the price of mortgage interest rates, which have been fairly volatile over the past few years. However, while this could be helpful to those who rely on predictable rates, such as buy-to-let landlords, those awaiting their first step onto the property ladder will likely be hoping to see significant rate cuts before the end of the year.
