The Bank of England has held the base rate at 4% following a narrow 5–4 vote by the Monetary Policy Committee (MPC) with Governor Andrew Bailey casting the deciding vote.
Bailey (main picture, inset) said the Bank needed to see clearer evidence that inflation is “on track to return to our 2% target before we cut again”, signalling that a reduction could come as early as the MPC’s next meeting on 18 December.
The decision comes amid slowing economic growth and speculation over the government’s forthcoming Budget on 26 November.
The Bank expects GDP to rise by just 1.4% this year and next, while unemployment is forecast to peak at 5.1% in 2026. Inflation stood at 3.8% in September and is expected to fall gradually toward target over the next two years.
DOWNWARDS PATH
Despite holding the base rate steady, policymakers dropped the word “careful” from their guidance, hinting that rates are now on a “gradual path downwards”.
Markets currently see the odds of a December rate cut as evenly balanced, depending on forthcoming inflation and labour-market data and the Chancellor’s Budget measures.
INDUSTRY REACTION
Iain McKenzie, Chief Executive of The Guild of Property Professionals, says: “The Bank of England’s decision to hold the base rate at 4% reflects a pragmatic balance between encouraging stability and maintaining downward pressure on inflation.
“While inflation remains above target, the latest data suggests we’re on a steady path toward more sustainable levels.
“From a housing market perspective, this pause reinforces cautious confidence, buyers and sellers are re-engaging, underpinned by genuine needs rather than speculation.
“Although mortgage rates have nudged slightly higher in recent weeks, activity levels remain strong, supported by serious movers and improving affordability trends.
“The increase in available stock is giving buyers more choice, which is helping to balance pricing and maintain healthy competition.
“Provided inflation continues to ease and the Budget avoids punitive housing taxes, we expect this measured environment to lay the foundations for a more confident and sustainable market recovery next year.”
BUDGET UNCERTAINTY
Simon Gammon, Managing Partner, Knight Frank Finance, says: “It’s perhaps unsurprising that the Bank of England opted to hold rates at 4% today, given the uncertainty surrounding the upcoming Budget later this month.
“That said, the decision was a close one – four members voted for a cut, which raises the possibility we’ll see a reduction as soon as December.
“The Monetary Policy Committee highlighted that the economy is running below potential; vacancies are falling and employment growth has stalled.
“Mortgage rates are likely to remain largely static in the near term. The best fixed rates have hovered around 3.8% for some time now, and while lenders are struggling to bring them meaningfully lower, we’re seeing innovation to attract new business.
“HSBC’s move this week to offer lending at 6.5 times income up to 90% loan-to-value is a good example of that.
“The Bank faces a delicate balancing act, with inflation still elevated, a softening jobs market, domestic fiscal uncertainty and a highly volatile geopolitical backdrop. Conditions remain uncertain, but the November Budget could go some way toward providing clarity.
“If that’s followed by a rate cut in December, we could see transaction activity start to pick up as we head into spring 2026.”
PRE-CHRISTMAS BOOST
Jason Tebb, President of OnTheMarket, says: “As expected, the Bank of England held interest rates once again at 4%. Although inflation held steady at 3.8% in the year to September, the vote was close with the rate setters voting by a majority of five to four to hold rates.
“While this will be disappointing news for those borrowers who had hoped for a rate cut this time around, it may mean the next reduction is not too far off.
“Five rate reductions since August 2024 have been hugely welcomed by buyers and sellers alike, boosting confidence, easing affordability and giving much-needed impetus to the market, particularly since the stamp duty concession ended.
“Whatever the Budget brings later this month, once the atmosphere of uncertainty has lifted there may still be an opportunity for the Bank to reduce rates before the end of the year, delivering a real pre-Christmas boost for the housing market.”
BUYERS MARKET
Matthew Thompson, Head of Sales at Chestertons, says: “As inflation remains above the 2% target and speculations about the impact of the Budget fuel uncertainty over the economic climate, there was little chance of a rate cut today.
“With only one more Monetary Policy Committee meeting scheduled for this year, a rate cut will be more likely in the first few months of 2026.
“Despite today’s decision not to cut rates, market conditions are currently in favour of buyers which is resulting in some house hunters rushing to finalise their search before the end of the year.”
UNCERTAIN TIMES
Nathan Emerson, Chief Executive of Propertymark, says: “Following four rate cuts since August 2024, today’s decision to hold interest rates reflects the Bank of England’s cautious approach in an uncertain economic climate.
“Stability can be reassuring for the housing market, giving buyers and sellers a clearer sense of direction after months of volatility.
“However, for many, affordability remains stretched, and the market would benefit from further easing when conditions allow. Sustained rate stability or a gentle reduction in the months ahead would help bolster consumer confidence and keep transactions moving.”
DIFFICULT DECISION
Jeremy Leaf, north London estate agent and former RICS Residential Chairman, says: “This time around the Bank had a more difficult decision to make than on previous occasions. Members of the interest-rate setting committee had to reconcile lower-than-expected inflation and wage growth with the likely impact of now-expected tax cuts in the Budget.
“The dangers of cutting rates further at this point could potentially reignite inflationary pressures which the Bank will be keen to avoid.
“As far as the housing market is concerned, activity has been in the doldrums for the past month or so since speculation about the Chancellor’s intentions intensified.
“However, the direction of travel for interest rates appears downwards which will give a boost to those sitting on the fence as well as others who are contemplating the end of fixed-rate mortgages at previously-agreed rock-bottom rates.”
UNLOCK MOMENTUM
Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “While market expectations for a base rate cut had risen, the Bank of England has remained cautious and held it at 4% for now.
“Regardless of the decision made today, we’ve recently seen lenders introduce new products and policies aimed at higher-income borrowers and larger loans, which is encouraging for the London market – particularly in the Richmond Borough.
“Although many have spoken about a market where not much is going on, which meant we were expecting a very quiet November in the run-up to the Budget, that hasn’t been the case. We’ve agreed a high number of sales – mainly freehold homes – with prices reaching up to £2.5 million.
“It may be that some buyers are moving now to hedge their bets in case the Budget proves less property-focused than expected. A measured Budget and a rate cut early in 2026 would be the ideal combination to unlock more momentum in the market.”
