Bank of England holds base rate at 3.75% for September

Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Bank of England holds base rate at 3.75% for September

The Bank of England's Monetary Policy Committee (MPC) has voted to hold the base rate at 3.75%. The decision was carried by a majority of 6:3, with three members voting to increase the rate to 4%.

The hold continues a pattern seen through 2026. In July, the hold at 3.75% was the fifth consecutive hold since the base rate was first cut to that figure in December last year.

Market volatility and inflation pressure

Geopolitical uncertainty surrounding the US-Iran conflict threw the market into disarray, with the early spring period seeing a raft of rate increases and product withdrawals. The market has settled in more recent months, but ongoing unrest and high inflation have made it more volatile than usual. In the last couple of weeks, a range of major lenders have implemented rate rises.

Yesterday's Office for National Statistics (ONS) inflation figures showed CPI increasing to 3.1% in August, up from 2.9%, a second consecutive monthly rise.

Industry reaction

Steve Cox, chief commercial officer at Fleet Mortgages, said holding the base rate at 3.75% felt like the right decision on balance, although the inflation figures underline pressure building on the MPC. He noted that risks remain to the upside, with higher oil and gas prices continuing to feed through as the conflict involving Iran and the US persists, but argued that raising the base rate would do little to address inflation generated by global energy prices while immediately increasing costs for borrowers on tracker and variable-rate mortgages.

For the buy-to-let mortgage market, Cox cautioned that the hold should not be interpreted as meaning product rates will stand still, because lenders have already had to respond to higher swap rates and funding costs over recent weeks. He added that the need for some lenders to build business volumes during the remainder of 2026 could provide some counterweight to those funding pressures. Landlords approaching a refinance have a clear need to act, he said, while purchasing landlords should think carefully about simply waiting for rates to improve, as there is no guarantee they will.

John Phillips, CEO of Just Mortgages and Spicerhaart, said a hold feels like the right call for now, though the crucial question is for how much longer. He pointed to very high oil prices remaining a key driver of inflationary fears, feeding into borrowing costs and volatility in swap rates.

Phillips also noted it has been encouraging to see clients still making moves, with a modest jump in buyer registrations and listings so far in September, and clients reviewing their mortgage options. While rates are changeable, he said, there is still plenty of money out there.

What this means for letting agents and inventory clerks

With buy-to-let lenders already adjusting pricing in response to swap rates and funding costs, agents working with landlords should be aware that refinancing decisions are front of mind for many. Landlords approaching a refinance are being advised to explore what is available now rather than wait for potential improvements.