Bank of England Set to Hold Rates at 3.75% for Fifth Time
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- Bank of England is expected to hold its base rate at 3.75% for a fifth consecutive time, with the Monetary Policy Committee's announcement due at 12:00 BST
- UK inflation was 2.6% in the year to June and is forecast to rise in July after a 13% increase in domestic energy prices, which the article attributes to the Iran war's impact on wholesale energy markets
- Mortgage lenders have been raising rates on new deals despite the expected hold, with the average two-year fixed rate at 5.62% — the highest in over a month — as over 8 in 10 borrowers sit on existing fixed-rate deals
- Bank of England projections cited in the article indicate more than 5 million homeowners will see their monthly mortgage repayments increase by the end of 2028
- Savers are seeing the best one-year fixed bond rates since October 2024 at 4.91%, with the article noting this is a 'silver lining after years of poor real returns'
- Analysts quoted in the article suggest the next rate change could be a rise rather than a cut, with the Middle East situation and a new government cited as reasons for caution
Why it matters: The 'hold' headline masks a tightening reality for borrowers: lenders are already raising new-deal mortgage rates to 5.62% over Middle East volatility, and the Bank projects 5 million-plus homeowners will face higher monthly repayments by end of 2028. On the other side, savers are quietly getting the best one-year bond rates since October 2024 at 4.91%.
