Interest rates held for the fourth consecutive time: what it means for your money
Today, the Bank of England (BoE) has announced a base rate hold, keeping the rate at 3.75%. Discover what this means for your money.
The base rate remains at 3.75%, where it has stood since December 2025.
Inflation currently stands at 2.8%, about the BoE’s 2% target.
With a potential ceasefire in the Middle East, inflation is set to ease over the rest of the year.
Since its initial drop in December 2025, the Bank of England (BoE) base rate has remained at 3.75%, with today's decision marking the fourth consecutive hold.
While the decision was expected, it was not unanimous. Seven members of the BoE's Monetary Policy Committee (MPC) voted to keep the base rate at 3.75%, while the remaining two voted to increase the rate to 4%.
Conflict in the Middle East and its impact have led to multiple held rates and concerns about a base rate hike, with markets pricing in two base rate cuts in 2026 before the outbreak of the conflict.
However, with a peace deal now signed and the reopening of the Strait of Hormuz on the horizon , the stage is set for inflation to ease over the rest of the year.
UK inflation is currently at 2.8%, 0.8% above its target of 2%, but down from 3.3% in April. Speaking during April’s BoE base rate announcement, the Monetary Policy Committee stated that, whatever happens, they would ensure inflation returns to target in the medium term.
While markets and consumers alike await the impact of the peace deal and the reopening of the Strait of Hormuz, this fourth base rate hold will affect your finances.
How a base rate hold impacts your mortgage
For homeowners on a variable-rate or tracker mortgage, today's decision means your monthly payments stay unchanged for now.
This offers some short-term stability; however, with uncertainty still prominent, this stability might be short-lived.
If you have a fixed-rate mortgage, your repayments are unaffected by this decision. However, fixed rates have climbed since the spring.
The average two-year fixed-rate mortgage is currently around 5.05%, and the average five-year fixed-rate is around 5.06%, according to Rightmove.
Remember that the base rate is a key benchmark influencing the new deals lenders offer. When your current fixed term expires, the prevailing rate will determine the cost of refinancing. If you're approaching the end of your deal, it's worth reviewing your options early.
A mortgage broker can increase the likelihood that your application will be approved.
How a base rate hold impacts your savings
Unlike earlier in the year, savings rates have been edging up rather than down, as providers respond to the prospect of rates staying higher for longer.
Average rates across easy-access and fixed accounts have risen steadily since March, which makes this a strong moment to shop around or lock in a fixed-rate bond.
According to MoneySavingExpert, the most competitive savings rates are currently:
Easy-access savings accounts: Around 5%
Fixed-term accounts (one year): Around 4.8%
Notice savings: Around 4.45%
If you want higher returns and don't need immediate access to your money, investing is an option. While returns can be greater, the level of risk is much higher.
If you do decide to invest, getting professional advice is beneficial. Unbiased can connect you with a financial adviser who can help you develop an investment strategy, evaluate your portfolio, or advise you on ways to reduce your tax obligations legally.
How a base rate hold impacts your annuity
For those approaching retirement, a steady base rate means annuity rates are also likely to hold firm.
Annuities provide guaranteed income for life, and their rates are closely linked to long-term interest rate expectations, so a higher-for-longer rate environment supports a strong annuity market.
Once you purchase your annuity, you lock in your rate, so it's worth shopping around the whole market before you commit.
Get expert financial advice
In the current uncertainty, making informed financial decisions is more important than ever.
Whether you're managing your mortgage, growing your savings, or planning for retirement, seeking professional guidance can provide clarity and confidence.
A qualified financial adviser can offer a personalised strategy to help you navigate the current climate and achieve your long-term goals.
Unbiased can connect you with a financial adviser who can empower you to make the most informed decisions to achieve your goals.
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