Bank of England Holds Base Rate at 3.75% — What It Means for Your Mortgage
- Ricky Gandhi
- 1 day ago
- 4 min read
Published: 18 June 2026 | 1st Choice Mortgages
The Bank of England base rate decision is in: the Monetary Policy Committee (MPC) met on 17 June 2026 and voted to hold at 3.75% for the third consecutive meeting. The vote split 7–2 — but the two dissenting votes were in favour of raising rates to 4%, not cutting them, reflecting ongoing concern about inflation pressure from global energy prices.
Here's what happened, why it happened, and what it means depending on the type of mortgage you hold.
The decision in brief
Bank Rate held at 3.75%, unchanged since the easing cycle concluded in late 2025
Vote split 7–2, with Megan Greene and Huw Pill voting for a 0.25 percentage point increase to 4.00%
CPI inflation eased to 2.8% in May, down from 3.3% in March
The Bank still forecasts inflation rising to around 3.25% by Q4 2026
Next decision: 30 July 2026
Why the Committee held — and why two members disagreed
The seven-member majority, including Governor Andrew Bailey, judged that financial conditions have already tightened significantly since the conflict in the Middle East pushed up global energy prices, and that this tightening is doing some of the work of containing inflation without an additional rate rise. A cooling labour market — unemployment edged up to 4.9%, vacancies are falling, and wage growth is trending back toward target-consistent levels — gave the majority confidence that the UK economy has limited capacity to sustain "second-round effects," where rising energy and food costs feed into broader wage and price increases.
The two dissenting members took a different view. They argued that households and businesses have become more sensitive to inflation surprises than in the past, increasing the risk that even a temporary energy shock could become embedded in longer-term price and wage expectations. Their preference was to raise rates now as a precaution, rather than wait for clearer evidence either way.
Global energy prices have eased somewhat as a Middle East peace deal has progressed, but remain well above pre-conflict levels and continue to be volatile — a key reason the Committee described this as a genuinely finely balanced decision.
What the Bank of England Base Rate Decision Means for You
Tracker and Standard Variable Rate (SVR) mortgages
No change to your monthly payment this month. However, the closeness of the vote — and the fact that two members pushed for a hike rather than a cut — suggests borrowers shouldn't assume the next move will automatically bring rates down.
Fixed-rate mortgages and remortgaging
Fixed rates respond to swap rate movements rather than Bank Rate directly, and swap rates have already risen since the energy shock began — two-year fixed pricing currently sits around 80 basis points above pre-conflict levels. If your current deal matures within the next three to six months, this is a good time to start reviewing your options, as pricing has shown sensitivity to developments in the Middle East.
Buy-to-let and portfolio landlords
Affordability stress tests and Interest Coverage Ratio (ICR) calculations remain unchanged following this hold. Given the Bank's emphasis on continued uncertainty, landlords planning refinances or portfolio growth should model a range of rate scenarios rather than assume cuts are imminent.
Property developers and bridging finance
Short-term and development finance pricing has largely already absorbed the post-conflict tightening in financial conditions. While a hold offers some short-term stability for underwriting, exit strategies should continue to be tested against a "higher for longer" scenario given the genuine division within the Committee.
Looking ahead
The MPC was unusually direct about how close this decision was, and indicated it will continue monitoring how the Middle East situation develops and how energy costs affect wages and prices in the months ahead. With the next decision due on 30 July 2026, and views inside the Committee still genuinely split, this is a debate likely to continue rather than resolve quickly.
Speak to a whole-of-market broker
Whether you're approaching the end of a fixed deal, refinancing a buy-to-let portfolio, or planning a development exit, understanding how this decision affects your specific circumstances matters more than the headline rate alone.
1st Choice Mortgages (1CMS) is a whole-of-market, FCA-regulated mortgage brokerage based in Harrow, London, with access to 90+ lenders across residential, buy-to-let, bridging, development finance, SPV/Ltd company structures, HMOs, and commercial mortgages.
Get in touch with Ricky Gandhi:
📞 020 8095 9030
Source: Bank of England Monetary Policy Summary and Minutes, 18 June 2026. 1st Choice Mortgages (1CMS) is authorised and regulated by the Financial Conduct Authority (FCA No: 828638). This article is for general information only and does not constitute financial or mortgage advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
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