Bank of England holds base rate at 5.25%

Adrian Anderson - Anderson Harris

Home » Bank of England holds base rate at 5.25%

Published: 21st September 2023

This Article was Written by: Adrian Anderson


In a much-anticipated decision following recent economic announcements, the Bank of England’s Monetary Policy Committee (MPC) today confirmed that the base rate would remain at 5.25%.

This decision reflects the Bank of England’s close monitoring of inflation as part of its long-term strategy to reduce it to the 2% target. Given yesterday’s announcement that inflation in August was 6.7%, the MPC is now cautiously optimistic that things are going in the right direction.

While the freeze is welcome (particularly as many forecasters had anticipated an increase), current interest rates alongside seasonal increases in energy consumption and other bills will still continue to squeeze household budgets.
Despite positive news about wage increases earlier in September, more people are realising that the freeze and reductions in tax thresholds mean take-home pay isn’t as they’d hoped. Many are already cutting back on other expenditures to make their mortgage payments, and this is likely to continue this Autumn.

Implications for homeowners

Given the popular take-up of 5-year fixed rates in 2018 and 2-year fixed rates in 2021, an unprecedented volume of mortgages are coming up for renewal in 2023. It has been estimated that around 700,000 customers are likely to be affected by this in the final half of 2023.

While the base rate currently remains unchanged, lenders have been reducing fixed rates on mortgages for a while as SWAP rates reduce. SWAP rates are based on what the markets think interest rates will be in the future. As some lenders are behind on their annual lending targets, they have reduced fixed rates in a bid to gain a higher share of a reducing market.

These rates are still higher than those of recent years, and we’re currently helping homeowners decide whether to go for a short-term product in the hope rates will reduce, or a long-term fix because they want surety of their outgoings in the years ahead.

Mortgage arrears volumes hit the headlines recently. It’s worth noting though, that lenders are still keen to avoid repossessions. Unlike previous decades, more support is now available for homeowners – particularly since the Government intervention in June.

Payment holidays and switches to interest-only mortgages are just some options. That said, we strongly encourage homeowners to speak with their lender or mortgage broker as soon as possible if they will struggle to make their mortgage payments.

Which type of buyers are most active?

First-time buyers seem to be very active now. Rents have been rising at a record pace, and property prices are softer now than they have been over the past couple of years. Unused to any other mortgage interest rate and with some landlords deciding to offload housing stock, many first-time buyers are seeing an opportunity to get onto the property ladder.

If your mortgage product is due to renew in the next 12 months

If your current fixed-term mortgage period is ending, it is vitally important to talk with your mortgage broker as soon as possible. Don’t leave this to the last minute, as it may limit your options. Ideally, you want to be discussing potential products at least six months before your current term terminates. This gives both you and the brokers time to find different solutions based on your current and future financial forecasts.

Regaining peace of mind

The messaging from the Bank of England regarding inflation is more positive now than it was a couple of months ago. With many people facing mortgage product renewals in the coming months, it’s still important not to panic.

Do contact our team of specialists. We will take time to understand your specific financial situation and work hard to find solutions to help you going forward. Contact us on +44 (0) 20 7495 6633 or e:

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