Bank of England Keeps Base Rate of Interest at 3.75%
It is the sixth consecutive meeting that the base rate has been held since it was cut to its current rate in December 2025.
With Consumer Prices Index (CPI) inflation rising to 3.1% in August, up from 2.9% in July, which had been the highest level since March, forecasters are predicting when the next change will be and are certain that, when that does come, it will be an upward one.
There are some signs that underlying inflationary pressures remain contained. Services inflation fell from 3.6% to 3.4%. That reduces evidence, so far, that higher costs are feeding more broadly into wages and prices however higher global energy prices have added to concerns about the inflation outlook and any further increase in overall inflation will add pressure to the policy makers to increase rates.
Major mortgage lenders have increased rates for the second time this month putting further pressure on buyer affordability.
NatWest, Santander, HSBC, Lloyds Bank and TSB are among those to have repriced products again since the start of September.
Nationwide and other building societies have also started a second round of increases as higher swap rates are feeding through to mortgage pricing.
The average two-year fixed mortgage rate stood at 5.73% on 15 September. It was 4.84% at the beginning of March. For somebody borrowing £250,000 over 25 years, Moneyfacts calculates that the increase adds around £131 to monthly repayments. That equates to an additional £1,572 a year.
Five-year fixes have also moved higher. The average rate has increased from 4.96% in March to 5.78%.
We would encourage anyone thinking about buying a home or those who will need to re-mortgage in the next 6 months to seek independent financial advice to best understand the options available to you.
If you have any questions on this or any other property related matter then please get in touch and we will be delighted to assist.
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