Mortgage costs remain volatile despite the Bank of England holding base rate as markets continue to react to inflation and geopolitical pressures.
New data from Moneyfacts shows the average mortgage rate has risen to 5.67%, up from 4.89% before the recent escalation in the Middle East.
The increase shows the extent to which mortgage pricing is driven by swap rates, gilt yields and inflation expectations, rather than base rate movements alone.
Since April 2021, average mortgage rates have fluctuated between 2.42% and 6.53%, underlining the scale of volatility facing borrowers.
MARKET EXPOSURE
For a typical £250,000 mortgage, this equates to a difference of around £580 per month, or close to £7,000 per year, depending on when the loan is secured.
The UK market remains particularly exposed to short-term rate movements, with a high proportion of borrowers on shorter fixed-rate deals compared to countries with longer-term fixes.
Recent market shifts have also been driven by changing expectations around interest rate cuts, with earlier forecasts of reductions now being scaled back.
This has pushed borrowing costs higher even without a formal increase in base rate, adding further uncertainty for brokers and borrowers.
PROLONGED UNCERTAINTY
Adam French (main picture, inset), Head of Consumer Finance at Moneyfacts, says: “The decision to hold rates is already working as a form of tightening.
“Markets had been pricing in a series of cuts before the conflict in the Middle East and the removal of those expectations has pushed borrowing costs up, even without a formal base rate rise.”
He adds that continued volatility risks prolonging uncertainty for borrowers, particularly if inflation proves more persistent than expected.
INTEREST RATE REACTION
Nathan Emerson, CEO at Propertymark, says: “Considering current tensions worldwide, it is reassuring to see base rates held steady.
“For those on the property ladder or thinking of approaching the buying and selling process, today’s news brings a sense of relief across the coming months.
“However being realistic in sentiment, we currently sit in the middle of a sensitive situation where many households haven’t yet fully recovered from issues connected to the cost of living.
“While it may genuinely feel the pressure is still on regarding affordability, it is hoped as tensions de-escalate globally, we will proceed to a more confident footing which offers more robust levels of household affordability for consumers within the long-term journey of purchasing a property.”
WAIT AND SEE APPROACH
Jason Tebb, President of OnTheMarket, says: “As expected, the Bank of England held interest rates at 3.75% for another month.
“Although inflation rose to 3.3% in the 12 months to March, up from 3% the previous month on the back of rising energy costs due to the conflict in the Middle East, the rate setters are wisely continuing their ‘wait and see’ approach, although one member voted for a quarter-point increase.
NO SURPRISE
Iain McKenzie, CEO of The Guild of Property Professionals, says: “The Bank of England’s decision to hold interest rates at 3.75% was no surprise.
“Ongoing geopolitical tensions continue to ripple through global energy markets, sustaining pressure on fuel costs and, in turn, inflation.
“That said, there are encouraging signs emerging beneath the surface. While borrowing costs have seen some volatility in recent months, mortgage rates began to stabilise towards the end of April.
“With swap rates easing, a number of lenders have already started to reprice their fixed-rate products more competitively. This is a positive shift and should help to bolster confidence among prospective buyers.
“The underlying resilience of the UK property market is also evident in the latest transaction data. HMRC figures show residential transactions reached over 104,000 in March, a modest monthly increase, but a clear indication that activity remains steady despite broader uncertainty.
“This reflects the fact that the market continues to be driven by needs-based buyers and sellers who press ahead regardless of external conditions. While discretionary movers may be taking a more cautious approach, carefully assessing pricing trends and market conditions before committing, demand remains.
“Overall, while the Bank’s cautious stance reflects ongoing inflationary pressures, the housing market continues to demonstrate notable resilience.
“As mortgage rates gradually ease, we can expect sentiment to strengthen further, supporting a steady flow of transactions as we move through the year.”
SENSE OF STABILITY
Nick Leeming, Chairman of Jackson-Stops, says: “The Bank of England’s decision to hold interest rates provides a welcome sense of stability for the housing market, offering reassurance after a sustained period of elevated borrowing costs following the inflation shock.
“This is not a comfortable pause. The Bank continues to be pulled in two directions, with inflation proving sticky while growth and household demand show signs of softening. That balance is keeping policymakers cautious about signalling any imminent policy easing.
“For the housing market, the implication is that borrowing conditions are likely to remain elevated for longer than many had anticipated earlier in the year. While mortgage pricing has already adjusted to a more stable rate environment, expectations for meaningful near-term relief in borrowing costs are likely to remain constrained.
“That said, the market is continuing to adapt to these conditions rather than being constrained by them. Buyers remain active, albeit more selective and price-sensitive, with a clear focus on long-term value. At the same time, we are seeing an uptick in instructions in key commuter hubs and lifestyle markets, when property is priced accurately, it is selling.
“Looking ahead, the balance the Bank strikes between persistent inflation and moderating growth will determine the direction of travel for interest rates over the remainder of the year. Overall, while activity remains measured, underlying market resilience continues to provide a platform for stability and gradual confidence to build as conditions evolve.”
INFLATIONARY PRESSURES BUILDING
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Although it is likely interest rates will go up again before they start coming back down, the hold today is a nod to the inflationary pressures which are building due to the impact of war in the Middle East.
“Certainly the Bank did not want to do anything which would compromise what little growth we have seen in the economy recently, which would clearly prove to be self-defeating.
“As far as the impact on the property market is concerned, the effects are likely to be fairly minimal although encouragingly we have noticed some mortgage costs starting to creep down again. This will certainly help to improve confidence which remains at a relatively low ebb.”
SHADOW OF UNCERTAINTY
John Phillips, CEO of Spicerhaart and Just Mortgages, says: “The decision to hold rates today will come as a relief to many, particularly given the shadow of uncertainty that continues to hang over markets following recent geopolitical tensions.
“There had been concern that rising pressure on inflation and energy prices could force a more hawkish response from the Bank, so a hold should help steady some nerves for now.
“That said, it does little to remove the uncertainty around where rates go next.
“Markets are still trying to assess how prolonged global disruption could impact inflation and whether that risks slowing or even reversing the current direction of travel for rates.
“Borrowers are increasingly aware that expectations can shift very quickly and that is feeding into decision-making.”
IMPROVING LANDSCAPE
Guy Gittins, CEO of Foxtons, says: “Following the increase in inflation to 3.3% this month, a hold on the base rate provides a welcome degree of stability for the property market.
“It also gives buyers greater certainty around borrowing costs when making long-term financial decisions.
“The market isn’t moving at the same pace as 2025, due to the Q1 boost we experienced last year from the stamp duty holiday ending.
“When compared to 2024, we’re seeing a stable and improving landscape, with resilient buyer interest and viewing numbers at Foxtons up in April when compared to March 2026.”
SUSTAINABLE RHYTHM
Verona Frankish, CEO of Yopa, says: “The property market hasn’t stalled, it’s simply found a more sustainable rhythm and today’s decision to hold the base rate will only help sustain this measured level of momentum moving forward.
“As the year progresses, we expect this steady level of activity to continue.
“The prospect of rate reductions later in the year is likely to provide a further boost to market confidence.”
PRICE-SENSITIVE MARKET
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “While a hold from the Bank of England was expected, as ever it’s the tone and forward guidance in the minutes that is just as important.
“As far as the housing market is concerned, the underlying need to move remains strong and, for well-priced, high quality homes, demand continues to hold up.
“In terms of pricing, the closer the asking price is to true market value, the greater the likelihood of securing a successful sale.
“Buyers are not stretching themselves to make offers they don’t believe will be accepted – particularly in this rate environment – they are simply choosing alternative properties.
“While the wider economic background may temper the pace of house price growth, we are seeing a more price-sensitive market where realism and accurate positioning are key.”
GEOPOLITICAL VOLATILITY
Chris Hodgkinson, Managing Director of House Buyer Bureau, says: “Another hold on interest rates is unlikely to do much to lift property market sentiment.
“The market is already treading with great caution against a backdrop of economic and geopolitical volatility and, while today’s decision provides a degree of certainty, it also prolongs the current sense of inertia.
“Buyers and sellers have been waiting for a clearer signal that borrowing costs are on the way down and, without it, many will continue to sit tight. As a result, this ongoing hold risks sowing further uncertainty into a market that’s already lacking confidence and it certainly won’t be enough to jump-start activity.”
PAUSE AND ASSESS
Tom Davies, Group Financial Services Managing Director, Mortgage Scout, part of LRG, says: “The decision to hold the base rate is in line with what many in the market expected, particularly given how much short-term volatility we’ve seen in recent weeks.
“With swap rates moving up and down in response to global events, this feels like a moment for the Bank of England to pause and assess rather than react too quickly.
“Periods like this tend to bring decisions forward. The key message is not to get caught up in short-term noise. If the property, the lending and the monthly payments all work, that’s what matters. With the right advice, borrowers can stay in control and adapt as the market evolves.”
ROOM TO KEEP MOVING
Kevin Shaw, National Sales Managing Director, LRG, says: “The decision to hold interest rates is the news many buyers, sellers and agents were hoping for. It does not remove uncertainty from the market, but it does remove an immediate threat.
“The Bank had a difficult decision to make against an unusually unsettled backdrop. The on-off ceasefire in Iran is changing by the day and the interest rate outlook has turned turtle in a remarkably short period: just two months ago we expected two interest rate cuts; since the war in the Middle East began, two rises over the course of the year appeared a likely scenario.
“The important point is that the situation looks less fragile than a month ago. Assuming the Middle East situation does not escalate, today’s hold suggests some easing of concern around the path of rates for the rest of the year. The fears of further rises being discussed in early March now feel less certain.
“The next Monetary Policy Committee meetings on 18 June and 30 July now become particularly significant. Much will depend on inflation, employment and whether global events continue to feed through into energy prices and household costs.
“The concern is that a rise later in June or July could coincide with the market entering its quieter summer season. As property professionals heave a sigh of relief yesterday, they must also think ahead to how a future rise will impact. But for now, a hold gives the market room to keep moving.”
LESS COMPETITIVE
Nigel Bishop of buying agency Recoco Property Search, says: “With inflation on the rise and ongoing political uncertainty, a rate cut was highly unlikely.
“Some mortgage-dependent buyers might decide to stall their search for the time being whilst others; particularly cash buyers; will cease the opportunity of a less competitive property market.”
