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

MPC holds Bank base rate at 3.75% as mortgage market splits on decision

The Bank of England's Monetary Policy Committee has voted to hold the bank base rate at 3.75%, and reaction from across the mortgage and property market has been divided. The decision was taken by a majority of 6–3, with three members voting to raise base rate by 0.25 percentage points to 4%.

The MPC said the pause was necessary to keep inflation, currently 3.1%, under control.

Bailey warns of possible future hikes

Bank of England governor Andrew Bailey said higher global energy costs have so far had a limited effect on price and wage setting in the UK. However, he warned that the longer this volatility persists, the bigger the impact on inflation will be, and the more likely it is that Bank Rate will need to be raised to ensure inflation falls back to the Bank's 2% target.

Experts divided on the hold

Anthony Curtis, director of mortgage broker FORTO Finance, said he was surprised the Bank did not increase rates. He pointed to the rest of the G7 reacting to rising inflation: the US Federal Reserve raised interest rates for the first time in three years the day before, and Japan is set to hike rates the following day. He argued the UK is not immune to the global oil shock and that, with energy-driven inflation running at 3.1%, the MPC should have reacted. He suggested many lenders had been pricing in a rate rise, and that a rise next month is "pretty much nailed on".

Others backed the hold. Duncan Kreeger, chief executive of commercial mortgage and bridging specialist TAB, said the Bank was right to keep rates unchanged for the sixth month in a row, despite growing fears of an inflationary upsurge as oil prices climb. He described leaving borrowing costs at 3.75% as the sensible option, noting that while higher energy prices could push inflation towards 4% this winter, the labour market matters too: the number of people in payrolled employment fell by 26,000 in August. He argued the MPC does not need to raise base rate, as the increase in government bond yields will naturally cool the UK economy and put downward pressure on inflation.

What it means for agents and clerks

For letting agents and inventory clerks, the hold keeps borrowing costs unchanged for now, but market commentators expect further movement soon, with some predicting a rise next month. Landlord financing costs, and therefore buy-to-let market dynamics, remain closely tied to the base rate path, making the MPC's next decision one to watch.