Bank of England holds base rate at 4.5%

The Bank of England’s Monetary Policy Committee (MPC) has voted to keep the base rate at 4.5%.

 

 

 

The MPC voted by a majority of 8-1 to hold the rate.

The decision follows the bank’s decision to decrease rates by 0.25% in early February, as policymakers continue to weigh inflationary pressures against concerns over economic growth.

While inflation has eased from its peak, the Bank remains cautious about cutting rates prematurely, particularly as core inflation remains above target.

The MPC has continually reiterated its commitment to bringing inflation back to 2%, suggesting that any future rate cuts will be data-dependent.

While this decision to hold rates was widely predicted by many industry figures, some had hoped for a cut to provide relief to borrowers facing elevated mortgage costs.

Reaction:

Hugo Davies, chief capital officer and MD mortgages at LendInvest:

“The Bank of England has kept the base rate at 4.5%, reflecting its continued balancing act between controlling inflation and managing borrowing costs.

“With inflation still hovering above target and economic growth fragile, the Central Bank is taking a cautious approach.

“This means no immediate relief for borrowers, but expectations of the next cut in May remain intact.

“March is a pivotal month for property investors shaping their 2025 strategy, with key market-moving events ahead – including next week’s Spring Budget, the Office for Budget Responsibility’s (OBR’s) UK Economic Forecast, and Office for National Statistics (ONS) inflation data, all set to provide critical insight into how borrowing conditions evolve.

“Borrowers should be closely tracking lender movements and considering finance structures that offer flexibility ahead of changing conditions. Investors, meanwhile, have a window to negotiate before market sentiment shifts.”

Nicholas Mendes, mortgage technical manager and head of marketing at John Charcol:

“The Bank of England has opted to hold interest rates at 4.5%, reflecting its cautious approach as it weighs persistent inflation pressures against a slowing economy.

“While the UK is grappling with weaker growth, with GDP contracting by 0.1% in January, inflation remains sticky, particularly in services, and private sector wage growth is still running high at 6.2%.

“The decision to hold comes against a backdrop of global uncertainty, with President Trump’s erratic trade policies adding fresh risks to the economic outlook.

“The potential for new tariffs has unsettled markets, while the UK Government’s upcoming Spring Statement could introduce further fiscal tightening, adding to the challenges facing businesses and households.

“While today’s announcement was widely expected, there had been some hope of a rate cut in the coming months.

“However, the Bank’s decision signals a preference to keep monetary policy steady until there is clearer evidence that inflation is easing sustainably.

“With headline inflation rising to 3% in January and expected to climb further by summer, policymakers remain cautious about moving too soon and risking a reversal of progress in stabilising prices.

“For now, the Bank is holding its nerve, keeping a close watch on how economic conditions evolve.

“With signs of a weakening labour market and ongoing concerns over business investment, the conversation around rate cuts is far from over – but today’s decision suggests the MPC isn’t ready to pull the trigger just yet.”

George Holmes, managing director of Aurora Capital:

“The Bank of England’s decision to hold the base rate at 4.5% reflects its ongoing concerns about stubbornly high wage growth, which remains well above inflation.

“With inflation also still above target and economic growth sluggish, this decision highlights the Bank’s cautious approach, but for small businesses in particular, it means continued financial strain at a time when costs remain high.

“Many businesses are already grappling with increased employment costs, including rising wages, National Insurance hikes, and reduced business rates relief.

“The combination of sustained high wage growth and interest rates remaining at 4.5% means that businesses looking to invest, expand, or manage debt will continue to face expensive finance options, hampering their ability to grow.

“With the next rate decision in May, SMEs need greater clarity on when borrowing costs will come down.

“While further cuts are anticipated at some point this year, businesses must remain cautious in financial planning, exploring cost-saving measures and refinancing options where possible.”

Alan Davison, chief commercial officer of Afin Bank:

“The Bank of England has a difficult balancing act at the moment because inflation remains high, yet economic growth has stagnated.

“The markets all seem to feel that more Base Rate cuts are due later in the year, but the Bank’s Monetary Policy Committee clearly wants to wait for tax rises to land and global trading conditions to calm down before acting.

“For new borrowers this isn’t great news as most are already going to have to deal with the impact of higher stamp duty thresholds from the start of April, so they would have benefitted from lower mortgage costs.

“They will be hoping for better news from May’s announcement.”

Nathan Emerson, CEO of Propertymark:

“Today’s news will likely prove encouraging for many people who are hoping to progress on the housing ladder.

“It is reassuring to see the base rate held, especially considering the many national and international factors that continue to shape the global economy currently. 

“With inflation currently standing at 3%, which is above the initially targeted rate by the Bank of England, it important there is very careful consideration over the forthcoming months to keeping the economy heading on the right pathway.

“Higher interest rates can of course affect mortgage products that are on offer, so it would always be welcome to see base rates lower when the wider economy fully allows.”

Ryan McGrath, director of second charge mortgages at Pepper Money:

“The Bank of England’s decision to hold interest rates reflects a more complex economic landscape.

“Since February’s decision, uncertainty has increased as the Chancellor begins to shape policy and rumours grow about what the Government’s upcoming Spring Statement may or may not say.

“Added to this, developments in global markets are creating additional considerations that require careful navigation.

“Holding rates will make homeowners on low, fixed, rate mortgages even more eager to keep their existing deals in place.

“The good news for many of them is that taking out a homeowner loan can allow you to do exactly that.

“These second charge mortgages often enable households to keep their current deal in place, including the interest rate and term, without having to pay early repayment charges.

“Doing so can be an ideal way for people to consolidate debts, renovate their homes, or pay for unexpected costs such as tax bills or larger purchases.

“Homeowners are becoming increasingly aware of the benefits of homeowner loans, and the Bank of England’s own data shows that during the second half of 2024, the second charge market grew by 25%, far outpacing the remortgaging market.

“We encourage homeowners considering home renovations, buying another property, or consolidating debt to assess all their options – including a second charge mortgage.”

Mark Harris, chief executive of mortgage broker SPF Private Clients:

“As expected, the Bank of England voted to hold rates at 4.5% this month.

“However, while predictable, the decision is disappointing as another rate reduction would help boost the housing market and wider economy, particularly as the stamp duty concession comes to an end this month.

“While the Bank remains concerned about rising inflation and sees it as a threat, the oncoming headwinds would appear to be stronger.

“The Bank must be proactive – by acting sooner rather than later and introducing further rate reductions, the money markets will shift expectations and swap rates should fall, which in turn will mean cheaper mortgage rates for borrowers.”

Jeremy Leaf, north London estate agent and a former RICS residential agent:

“As expected, interest rates have remained at their 18-month low of 4.5%.

“It seems concerns over the direction of travel for inflation, as well as volatility arising from the decisions by the US to raise trade tariffs, have outweighed the desire from the MPC to arrest the recent fall in GDP and confidence generally.

“Worries about the fallout from imminent increases in national insurance and the minimum wage are certainly weighing heavily on some when considering taking on extra debt.

“However, activity has remained relatively resilient recently and prices, though softening a little, have held up well, particularly for houses.”

Nick Leeming, chairman of Jackson-Stops:

“Today’s decision by the Bank of England to hold rates reflects a growing sense of ambiguity about the UK’s economic outlook.

“A perfect storm of slashed growth forecasts, rising inflation, possible US tariffs and UK tax increases has caused the monetary policy committee to stick instead of twist with March’s decision. 

“While Labour is downplaying the likelihood of policy changes in the Spring Statement, the second fiscal update from the Chancellor could either calm the seas or rock the boat.

“The lack of certainty of either outcome is causing the ‘wait and see’ mindset to creep in for businesses and consumers.

“Despite the wider economic picture, this has not dampened the spirits or commitment within the property market, with the latest HMRC data showing a 14% bounce in transactions, this is a market of opportunity, not fear.

“The market remains characterised by undersupply and planning delays, continuing to give sellers the upper hand.

“Labour entered this Parliament with a clear ambition to deliver 1.5 million new homes within the next five years, yet planning permission approvals in England are now at the lowest level in more than a decade.

“Whilst Labour’s Planning and Infrastructure Bill is set to tackle the red tape, many argue that it does not go far enough to deliver the homes they have promised.”

Patrick O’Donnell, senior investment strategist at Omnis Investments:

“The BoE kept rates steady today as widely expected. Cautious easing is likely to remain narrative du jour, with the next cut most likely in May.

“The MPC will continue to weigh up gloomy sentiment and a high degree of macro uncertainty versus still elevated wages and for now, persistent inflationary pressures.

“There weren’t too many shocks from the labour market report earlier this morning. Job growth remains ok for now and certainly better than some of the survey indicators.

“Private sector ex-bonus AWE rose 6.1%, as expected but lower than 6.2% last time. “

It is still 6.1% though. Redundancies did increase in January and looks like the most significant rise in four years.

“So there are some more cracks beginning to present themselves. Let’s see what inflation brings us next week.

“In terms of markets, they’ll continue to be driven by technical and sentiment, with April 2nd not that far away.”

John Phillips, CEO of Just Mortgages and Spicerhaart:

“Even the most avid supporter of rate cuts likely saw today’s decision coming – as did the financial markets with many already pricing in this outcome.

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“As is often the case, it also mirrors yesterday’s decision by the Fed to keep interest rates unchanged amid similar economic uncertainty, slowing growth and higher inflation.

“We continue to hold our breath that future cuts are indeed coming, although like our US counterparts, the pace and frequency depends entirely on the economic outlook at home and abroad, and inflation dynamics – which in the UK remains sticky and highly volatile.

“Future cuts couldn’t come soon enough in a mortgage and property market that is still battling clear affordability challenges, not helped by the upcoming change to stamp duty thresholds.

“On top, we prepare for any potential surprises that may come in the Spring Statement next week.

“Thankfully, lenders continue to play their part to support borrowers and from our perspective, there is still appetite within the market with buyer registrations, valuation requests and mortgage appointment numbers all remaining consistent.

“It’s encouraging to see there is still a clear demand for advice and advisers will continue to play a pivotal role as clients try to navigate an ever-changing market landscape.”

Gareth Lewis, managing director of specialist lender MT Finance:

“The MPC was expected to maintain base rate at 4.5%, signalling a cautious approach to monitoring the impact of inflationary pressures following last month’s cut. 

“This holding pattern may indicate the beginning of a more normalised interest rate environment, ushering in a welcome period of predictability.

“Lenders can refine offerings and consider competitive adjustments to match the environment.

“We expect transaction volumes to continue the upwards recovery trajectory, as market participants operate with greater certainty.”

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:

“The Bank of England’s decision will be closely watched and the minutes of the meeting scrutinised.

“Rates were expected to remain at 4.5% but any suggestion of an imminent cut would provide relief to buyers, particularly those relying on high-value mortgages. 

“A clearer roadmap for rate reductions would help restore confidence and encourage market activity.

“There has been much talk of rate reductions but fluctuating inflation and other concerns are holding the rate-setters back.

“The key question is whether Reeves and the MPC will act to support growth – or introduce more hurdles for the property market to navigate.”

Daniel Austin, CEO and co-founder at ASK Partners:

“The Bank of England’s decision to hold interest rates steady reflects the ongoing balancing act amid Trump-driven market uncertainty, tariff policies, and the UK’s upcoming tax changes.

“The broader effect will hinge on how quickly lenders adjust mortgage rates and whether this holding pattern persists.

“For homeowners and prospective buyers, the appetite for lower rates, which should, in theory, make mortgages more affordable, is increasingly evident.

“Yet, with fixed mortgage rates staying stubbornly high despite earlier signs of easing, any immediate relief may be limited.

“Still, a more stable rate environment could gradually restore buyer confidence, particularly among those who’ve been holding back, waiting for clearer signals.

“For investors and developers, the path to rate cuts will be pivotal. Demand remains resilient, particularly in high-growth sectors like co-living and build-to-rent, where supply constraints continue to attract capital.

“As we approach a potential shift in government policy and economic direction, real estate stakeholders must stay nimble.

“Should rates fall, as some predict, this could spark a more sustained recovery in transaction volumes and investment flows.

“However, with uncertainty still looming, strategic financial planning remains essential to navigating the evolving landscape.”

Jason Tebb, president of OnTheMarket:

“As widely expected, the Bank of England has voted to hold interest rates at 4.5%. With inflation rising to 3 %, exceeding the Bank’s 2% target, caution prevailed.

“While a hold in rates will be disappointing for borrowers, it does suggest a welcome level of stability which was not apparent when inflation was in double-digits and the Bank was forced to respond with consecutive rate hikes.

“The trajectory for interest rates is downwards, but with global uncertainty and inflationary pressures these reductions may take longer to filter through than the markets previously thought.

“The base rate reductions we have seen since August have boosted activity and transactions in the market, and further cuts, when they come, will bolster confidence.”

Neal Moy, managing director of Paragon Development Finance:

“While many of us want to see the Bank of England base rate reduced, it’s no surprise that the MPC held steady at 4.5%.

“Inflation has started to creep up again slowly and other external factors continue to cause uncertainty in the market, prompting the caution.

“While it won’t be a surprise for many that it wasn’t reduced today, would-be house purchasers will be looking for the Base Rate to come down in the coming months to make mortgages more affordable, particularly with the forthcoming Stamp Duty increase.

“Ultimately, we need to stimulate more demand for the housing market to thrive, and while we are seeing this return slowly, mortgage rates are a big factor in driving housing transactions.”

Thomas Cantor, co-head of short-term finance at West One Loans:

“It is no surprise that the Bank of England has decided to hold rates given that inflation continues to prove more persistent than thought with CPI measuring 3% in January 2025 and the latest figures from the Office for National Statistics also showing that growth in earnings has held firm.

“The Bank of England is also forecasting inflation to continue to rise to 3.7% this year.

“With these levels clearly being higher than the target of 2%, largely driven by energy prices, I think their decision was really made for them today.”

Robert Sadler, vice president of real estate at Excellion Capital:

“Today’s hold was to be expected given the fact that inflation increased to 3% in January — well above the expected 2.8% —  and so a second consecutive cut to the base rate would’ve been a shock.

“While property investors and financiers would’ve liked to see a cut, which would have definitely inspired a boost in industry activity, on balance the sector can afford to wait until May for this to happen.

“Recent history has shown us that cutting rates too low too soon can lead to harmful inflation, which is the cause of the current higher rate environment.

“Therefore, the Bank’s prudent approach here today is a sensible one.”

Stephanie Daley, director of partnerships at mortgage adviser Alexander Hall:

“The nation’s homebuyers will be understandably disappointed that interest rates have remained frozen at 4.5% today, however, the landscape has improved dramatically in recent months and we have seen mortgage pricing track downwards since the start of the year.

“Both those looking to purchase, as well as those coming to the end of a fixed-term, will find themselves far better off today versus even this time last year and we expect the picture to continue to improve as a hold on the base rate brings ongoing stability to the market.”

Jonathan Samuels, CEO of specialist lender Octane Capital:

“No news is still good news for the nation’s borrowers and whilst they will have been hoping for a second cut this year following the reduction seen in February, it’s probably a case of wishful thinking given that inflation has reared its head again in recent months.

“A hold on the base rate will, at least, ensure that market stability continues to build over the coming months as buyers continue to act with the reassurance that mortgage rates are unlikely to climb.”

Gareth Samples, CEO of The Property Franchise Group:

“The Bank of England’s decision to keep the base rate unchanged comes as no surprise, given the delicate balance between controlling inflation and supporting economic growth.

“While further rate cuts are anticipated later in the year, it’s clear that the Monetary Policy Committee is taking a measured approach.

“Encouragingly, we are seeing a steady recovery in market activity.

“Sales volumes have returned to pre-pandemic levels, mortgage approvals are on track with long-term trends, and first-time buyer numbers have rebounded significantly, spurred on by improving affordability and the impending Stamp Duty changes.

“Mortgage rates have also eased, with some competitive fixed-rate deals now available below 4% for those with a strong deposit.

“This is providing buyers with greater confidence to move forward with transactions, which in turn is supporting moderate house price growth.

“While external pressures such as geopolitical uncertainty and inflationary risks remain, the fundamentals of the housing market remain robust.

“Moderate GDP growth is still expected to underpin sustained sales activity, and with buyer confidence improving, we anticipate a stable and positive year for the property market in 2025.”

Andrew Gething, managing director of MorganAsh:

“Today’s decision was probably one of the easiest to predict given the economic landscape and the central bank’s own gradual and careful approach to monetary policy.

“In truth, the data just isn’t there yet for the Bank of England to make the decision to cut – although, we remain hopeful that this will still come.

“While stability on interest rates is not necessarily a bad thing, rates remaining high keeps the pressure firmly on those households that are already feeling the pinch.

“In these moments, the opportunity for clients to find themselves in a vulnerable situation is all too easy and given the wider stakes in play – such as a heavy focus on disability and welfare in next week’s Spring Statement, firms absolutely need to have a real grasp on customer vulnerability.

“The recent multi-firm review by the FCA once again highlighted this is a real issue for firms, with many still unable to monitor or take action on outcomes for vulnerable customers – despite the renewed emphasis of Consumer Duty.

“As more clients potentially require greater and more tailored support, firms absolutely need the right strategies, training and technology in place to generate the necessary data to respond properly.” 

David Hollingworth, associate director at L&C Mortgages:

“Today’s decision was widely anticipated and never likely to carry any major surprises with a hold always on the cards. 

“Given the fact the outcome was virtually nailed on, there should be barely a ripple in the mortgage market.

“Lenders remain highly competitive and continue to make small adjustments to improve rates wherever they possibly can. 

“That trend looks likely to continue so it’s unlikely to result in any major drops in rates. 

“The Bank of England has consistently suggested that interest rates can fall further, adding to the three cuts since last summer. 

“Consequently, fixed rates have already priced in further reductions base rate, but this is still expected to be a gradual process. 

“Unless there is a marked shift in the Bank’s messaging, mortgage rates look set to should remain relatively stable in the near term.”

Mark Michaelides, CCO of Molo:

“The BoE’s decision to hold rates at 4.50% is not a surprise, particularly in light of this morning’s steady wage growth numbers; what’s more interesting, however, is the strong consensus for the hold, with only one member – Swati Dhingra – voting for a cut.

“While the 3% inflation read from February remains above the BoE’s 2% target and the inflationary impact of Trump’s tariffs have yet to feed through into the consumer cost basket, pessimism about the UK’s ability to grow GDP, with limited fiscal levers available, is growing ahead of next week’s Spring Statement. We still expect a rate cut in May.”

 

SOURCE:  The Intermediary 20/3/25 Bank of England holds base rate at 4.5% - The Intermediary - Latest UK mortgage news