The Bank of England held the base rate at 3.75% yesterday with policymakers warning that rising global tensions and higher energy prices could push inflation up again in the short term.
The decision by the Monetary Policy Committee was unanimous, reflecting a cautious stance as the Bank weighs signs of stabilising inflation against fresh risks from overseas events.
Officials said the conflict in the Middle East and the resulting increase in oil and commodity prices had created a new inflationary shock, making it harder to judge when interest rates can begin to fall.
The hold means borrowing costs remain elevated for homeowners and landlords, with mortgage rates likely to stay higher for longer while the Bank waits for clearer evidence that inflation is under control.
MIDDLE EAST IMPACT
In a statement, the MPC said: “The Committee will continue to monitor closely the situation in the Middle East and its impact on global energy supply and energy prices.
It stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.”
The Bank’s latest decision will be watched closely by the housing market, where hopes of rate cuts earlier in the year have faded as inflation risks have re-emerged.
Lenders had begun to ease mortgage pricing in recent weeks but expectations of a slower path to lower rates could limit further reductions in the near term.
INDUSTRY REACTION
Nathan Emerson, CEO of Propertymark, says: “The decision to keep base rates on hold provides a welcome sense of stability for the property market.
“Mortgage repayments remain predictable, which is critical for households balancing cost-of-living pressures. Stability in interest rates can support continued buyer confidence and property transactions, particularly in a market already facing supply constraints and rising house prices.
“For sellers and landlords, this environment allows for measured planning, while buyers can explore financing options without the immediate concern of rising borrowing costs.”
NO GREAT SURPRISE
Kevin Shaw, National Sales Managing Director, LRG, says: “The Bank of England sitting on its hands will not come as any great surprise.
“Only a few weeks ago, a cut looked quite likely, but the renewed instability in the Middle East and the inflationary shadow cast by higher oil prices have clearly made Threadneedle Street a little more cautious.
“That said, the housing market has so far shown a fairly British talent for keeping calm and carrying on.
“We are not seeing the conflict translate into any meaningful slowdown in agreed sales or new listings, and our application levels from would-be buyers are up 9% on 2025. For all the noise around inflation and geopolitics, plenty of people still want to move and, crucially, are willing to get deals done. The market remains price sensitive, as it has for the past two years, but demand is clearly present.
“I view new sales agreed as the ‘canary in the coalmine'”
“I view new sales agreed as the “canary in the coalmine” – they are usually the first thing to drop off if confidence really starts to crack. So far, that canary is still singing.
Of course, a rate cut would have been welcome. Buyers always prefer a tailwind to a headwind. But one hold does not redraw the map. With six MPC meetings still to come this year, there is still every chance of rates easing later in 2026, and a move on 30 April would be warmly received.
“In the meantime, the property market looks less rattled than some of the commentary around it. The Bank may have delayed its long term objective of reducing interest rates, but from our perspective buyers and sellers are not delaying in their willingness to transact.”
CAUTIOUS STRATEGY
Colin Bradshaw, CEO at TwentyCi, says: “The Bank of England’s decision to maintain the base rate at its current level was widely expected and reflects a cautious strategy in the current uncertain climate.
“The ongoing volatility in the Middle East has undoubtedly added a layer of complexity and the Bank is likely wary of cutting too soon and risking an inflationary rebound that could undo the progress made over the last year.
“While buyer demand remains resilient, the lack of a downward move does not increase the affordability needed to unlock the next level of transaction volumes. We expect the market to remain stable, but the anticipated spring surge may be more of a steady trickle until the path to lower rates becomes clearer.”
UNCERTAIN CLIMATE
Jason Tebb, President of OnTheMarket, says: “As expected, the Bank of England held interest rates at 3.75% for another month.
“Although inflation fell to 3% in the year to January, since then the conflict in the Middle East, rising energy costs and fears that this will fuel inflation have created a more cautious ‘wait and see’ approach, with a unanimous vote from the nine members to hold base rate.
“Interest rate cuts have proven to be hugely important for the housing market over the past few months, providing impetus and enabling buyers and sellers to plan ahead with more confidence.
“Six interest rate reductions since August 2024 have significantly improved buyer affordability and there will be understandable disappointment at the lack of another cut this month.
“With lenders pulling mortgage products and repricing upwards in recent days to reflect higher Swap rates and maintain service levels, there is a degree of uncertainty and volatility. That said, people need to move, particularly those who may have delayed due to prolonged speculation surrounding last autumn’s Budget, and they are proceeding with their transactions.”
BALANCING ACT
Nick Leeming, Chairman of Jackson-Stops, says: “The Bank of England’s decision to hold rates at 3.75% underscores the cautious stance signalled by last month’s narrow vote.
“Markets had been anticipating gradual cuts throughout 2026, but that scenario now appears unlikely in the near term due to ongoing geopolitical uncertainty.
“Rising inflation and higher energy prices have reinforced the case for holding rates steady, with many lenders already moving fixed mortgage rates above 5%.
“For the roughly 1.8 million homeowners needing to refinance in 2026, today’s decision provides a measure of stability. While borrowing costs remain higher than in recent years, they are still below long-term averages.
“Looking ahead, the trajectory of rates will depend on how inflation evolves, leaving the Bank with a delicate balancing act in the months to come.”
CONTINGENCY PLANS IN PLACE
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Just a few weeks ago we were speculating how soon, and by how much, base rate would be cut at this meeting, not if it would. However, the no-change decision has come as a relief as some had thought an increase more likely.
“The improvement in activity in the housing market seen in the early part of 2026 is still there to an extent but caution now prevails.
“The Bank has recognised the importance of maintaining borrowing costs to counteract the inflation wave prompted by the Middle East war, which is already hitting the economy.
“In our offices, buyers who are not sellers are becoming increasingly conscious of the need to build in a contingency within calculations for higher mortgage rates as hostilities persist.”
COMPLEX SITUATION
Iain McKenzie, CEO of The Guild of Property Professionals, says: “The Bank of England’s decision to hold the base rate at 3.75% reflects the increasingly complex backdrop policymakers are navigating.
“While inflation has eased to 3.0% in recent months, the escalation of geopolitical tensions in the Middle East has introduced fresh inflationary pressure, prompting the Bank to pause its rate-cutting cycle for now.
“For the housing market, this means borrowers should prepare for mortgage rates to remain higher for longer, and the prospect of a return to the ultra-low rates seen in the past looks increasingly unlikely in the near term. If tensions persist and inflationary pressures re-emerge, we could even see renewed upward pressure on mortgage costs.
“In the current environment, pricing strategy remains critical. Homes that are marketed realistically continue to sell in a reasonable timeframe, on average around 40 days, although regional differences are significant, with more affordable areas seeing faster turnover than higher-priced markets.
“A measured approach from the Bank should help prevent a more volatile path for interest rates and, in turn, support a steadier housing market through what remains an uncertain global outlook.”
STABILITY WILL BE KEY
Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “Markets were widely expecting a hold in base rate today, but the tone of the announcement is just as important as the decision itself.
“Stability and clear guidance will be key in reassuring both lenders and borrowers after a period of heightened volatility driven by global events.
“Across the property market, while both buyers and sellers are naturally discussing the evolving situation in the Middle East, we are not currently seeing a material impact on pricing or transaction levels. Although the recent uptick in mortgage rates is unlikely to be welcomed, demand remains resilient, particularly for well-priced, high-quality homes.
“Many movers delayed decisions last year amid uncertainty around the Autumn Budget and the policy direction of the Labour Party, and there is still a clear underlying need to move. As a result, for the right property, committed buyers are continuing to proceed with confidence.”
POTENTIAL SLOWDOWN
James Nightingall of property search service HomeFinder AI says: “The property market could face a potential slowdown in buyer activity amid stagnant interest rates and recently increased mortgage costs.
“Cash buyers and those needing to move now for personal circumstances on the other hand, remain undeterred.
“As we are entering spring, buyers going ahead with their property search will benefit from a larger selection of homes to choose from as a growing number of sellers have been entering the market over the past few weeks.”
CUT AGAINST THE ODDS
Nigel Bishop of buying agency Recoco Property Search says: “Bearing in mind the current geopolitical climate, a rate cut would have been against all odds.
“Still, we expect the majority of house hunters to proceed with their property search; particularly as we enter the traditionally busy spring market.”
REASSURANCE FOR HOUSE HUNTERS
Adam Jennings, Head of Residential at Chestertons, says: “The hold on interest rates provides reassurance for house hunters.
“As we enter spring, we expect buyer motivation to pick up further.
“This will be especially true from cash buyers who aren’t impacted by some lenders’ recent move to withdraw a number of mortgage deals.”
LARGELY EXPECTED
Guy Gittins, CEO of Foxtons, says: “Today’s decision from the Bank of England was largely expected given the market movements we’ve seen in recent weeks following developments in the Middle East.
“So far this year, we’ve seen steady growth in both house prices and supply.
“We expect this to continue against the backdrop of a more stable and favourable position for borrowers when compared to twelve months ago, despite recent market adjustments.”
LONDON STILL ATTRACTIVE
Damien Jefferies, Founder of Jefferies London, says: “The decision to hold the base rate will be viewed as a measured response to recent global developments, which have influenced sentiment across financial markets quite considerably in recent weeks.
“For international and high-net-worth buyers, consistency in monetary policy is key, so today’s decision to hold the base rate will provide some stability in this respect.
“London remains a highly attractive destination for global property investment, and in times of wider global change, we often see an increased appetite from overseas buyers looking to secure assets within established, transparent markets such as the UK.”
NO SURPRISE
Verona Frankish, CEO of Yopa, says: “Today’s decision to hold the base rate is unlikely to come as a surprise, however, the important point is that the UK property market remains in a far stronger position than it was this time last year, despite increased instability on the global stage.
“Buyer confidence has improved, borrowing conditions have become more predictable, and a steady base rate will only help provide the certainty many domestic buyers need to move forward with confidence.”
GLOBAL UNCERTAINTY
Sarah Thompson, Group Financial Services Director, Mortgage Scout, part of LRG, says: “The decision to hold the base rate reflects a market that has been moving in the right direction, but is still adjusting to ongoing global uncertainty.
“While recent headlines have focused on mortgage rates edging upwards, the reality is that these movements remain relatively modest and far from the sharp increases seen in previous years.
“What we are seeing in practice is a clear shift in borrower behaviour.
“There is a greater sense of urgency, particularly among those approaching remortgage, as customers look to secure a rate and bring forward decisions they may have otherwise delayed. That is being driven as much by confidence and sentiment as it is by the actual cost of borrowing.
“Importantly, affordability remains the key consideration. For most borrowers, recent rate changes equate to manageable differences in monthly payments, rather than a fundamental barrier to moving or refinancing. Lenders continue to have a strong appetite to lend, and there are still competitive products available across the market.
“In a more changeable environment, preparation is everything. Speaking to a broker, understanding your options and securing a rate early puts you in control, with the flexibility to review again if conditions improve before completion. Ultimately, it is about focusing on what you can afford and making informed decisions, rather than reacting to short-term headlines.”
VOLATILE MARKET
Matt Smith, Mortgage Expert at Rightmove, says: “Recent geopolitical uncertainty has made financial markets more volatile. That volatility feeds into swap rates, which are the underlying costs lenders use to price fixed‑rate mortgages. As a result, some mortgage rates have nudged up slightly this week, even though the Bank Rate itself hasn’t changed.
Lenders are being understandably cautious in this environment. Some are quicker than others to adjust rates, which can lead to uneven changes across the market.
“These recent rises are understandably concerning for anyone preparing to take out a new mortgage or remortgage. Even a small increase can make a real difference to how a monthly budget feels. For context, the average monthly mortgage payment on a new purchase has increased by around £45 so far, but is still around £70 lower than it would have been at this time last year.
“This is an unfortunate but expected pattern in the way mortgage pricing moves when markets are unsettled. For now, the Bank Rate remains stable, mortgage rates remain significantly lower than the peaks seen last year, and there continues to be strong competition among lenders – even if some buyers choose to pause while the picture settles.”
