Sep
2026
Bank of England interest rate decision: Experts respond
DIY Investor
17 September 2026
Neil Louth, Group Executive Director, LRG and CEO, Acorn Group comments on the announcement by Bank of England’s Monetary Policy Committee.
“Today’s decision to keep Bank Rate at 3.75% provides a welcome window of stability ahead of the Budget on 28 October and the Bank’s next decision on 5 November, in advance of which the markets are increasingly pricing in the possibility of a rise.
“The clearest sign of resilience is that people with a genuine reason to move are still transacting. Families need more space, parents move for schools and older homeowners want to downsize. People cannot put their lives on hold indefinitely and we continue to see active buyers and sellers entering the market for those reasons. We are also seeing early signs of some landlords returning where corrected prices are creating better long-term value.
“Mortgage costs are only one side of the equation. The price paid for the property matters just as much. In prime central London, values are approximately 24.5% below their 2014 peak and around 50% lower after inflation. Mortgage rates can change when buyers refinance, but the price agreed for a property cannot. For buyers who can manage the repayments and take a longer-term view, this represents some of the best relative value available for more than a decade.”
Sarah Thompson, Group Financial Services Director, Mortgage Scout has commented on the basis that interest rates are held at 3.75%:
“Today’s decision to hold the base rate at 3.75% is the right one. Mortgage pricing has already moved in response to swap rates and the wider financial markets, so increasing the base rate would have placed more pressure on households without necessarily tackling inflation that is being driven largely by higher oil and energy costs.
“There is no doubt that people are feeling cautious. Food, fuel and household bills have all increased, while borrowers coming off the exceptionally low fixed rates available five years ago are facing higher monthly repayments. However, borrowers shouldn’t assume that waiting several months will result in a dramatic reduction in their mortgage costs. Rates may move in either direction, but the changes we are seeing now are far more incremental than the sharp increases borrowers experienced when mortgage rates first rose.
“For buyers who have a good deposit, a stable income and can comfortably afford the repayments, the current market presents genuine opportunities. Asking prices are being reduced, sellers are becoming more open to negotiation and buyers who are ready to proceed are in a strong position. This is particularly relevant for people moving up the property ladder because the saving they negotiate on their next home could be greater than the reduction they accept on the property they are selling.
“It is also important to remember that the mortgage rate secured today will not necessarily be the rate paid throughout the life of the loan. Borrowers can structure the mortgage term to keep repayments manageable, while retaining the option to overpay or refinance later. Anyone who is financially ready to buy or move should look at the opportunity in front of them, rather than putting their plans on hold in the expectation that mortgage costs will suddenly fall.
“For anyone due to remortgage, the message is more immediate. With the Budget next month and the next Bank of England decision following in early November, now is the time to review the options and secure a rate. If a better deal becomes available before completion, it may still be possible to switch, but waiting could mean losing access to a rate that is available today.”
Focus on BOE after Fed rate hike
Markets initially absorbed the hike relatively calmly because it was almost fully priced, but the reaction turned more defensive during Warsh’s press conference. The 10-year Treasury yield returned to roughly 5%, the dollar gained around 0.6%, while the S&P 500 reversed earlier gains and finished lower. That tells us investors were responding primarily to the future policy path rather than yesterday’s hike itself. Importantly, the long end moved much less than the front end, producing a flatter curve as markets priced tighter Fed policy without materially increasing the longer-term inflation premium.
Attention now shifts immediately to the Bank of England today. A hold at 3.75% remains the consensus expectation, but this week’s rise in UK CPI to 3.1% and stronger producer-price pressures have strengthened the hawkish argument just as the labour market is weakening. Markets now attach roughly an 80% probability to a November hike, so the vote split and Bailey’s assessment of second-round energy effects may matter considerably more than today’s headline decision. Then comes the Bank of Japan on Friday, where a 25bp hike to 1.25% is overwhelmingly expected. The BoJ faces a somewhat different problem: underlying inflation is moving back towards 2%, energy costs remain elevated and policymakers are still trying to normalise policy after years of exceptionally low rates. Taken together, this week marks a significant shift in the global rates backdrop: the Fed and ECB have already tightened, the BoJ is expected to follow, and even the BoE is confronting growing pressure to do so. The key question for markets moving forward is how far this renewed global tightening cycle ultimately needs to go before inflation risks are contained.
Commenting on the BoE rate hold, Pierre Roke, Global Capital Markets Analyst at Validus Risk Management, said: “The Bank of England held rates at 3.75% today, a decision firmly in line with expectations. However, what stood out was the vote split: 6-3, a genuine and widening divide within the MPC rather than the near-unanimous hold markets have grown used to.
“That division comes amid a sharp repricing of the outlook. Barely a month ago, swaps implied fewer than two rate hikes by summer 2027; today, that figure is closer to four.
“Markets will closely scrutinise Governor Bailey’s comments for clues on how the Bank sees the conflict in Iran feeding through to energy prices and UK inflation. The war remains a key driver of rising yields, with energy prices a major source of uncertainty heading into year-end.
“Fiscal policy will also be firmly in focus ahead of the Autumn Budget. Any signals about the credibility of the government’s fiscal plans could have significant implications for gilts and sterling in the weeks ahead.”
Dominic Grinstead, CEO at MetLife UK, comments: “While the Bank Rate has been held today, swap rates – which influence the pricing of fixed-rate mortgages – remain elevated, putting continued pressure on mortgage costs. For those buying or coming to the end of a fixed-rate deal, a significant proportion of household income can be committed to keeping a roof over their heads, leaving little room for unexpected financial shocks.
“When mortgage repayments take up such a significant share of a monthly budget, families are left with little to no financial buffer. Our research shows that 28% of homeowners have already fallen into financial difficulty and missed a mortgage payment due to an unexpected illness or injury, and 20% have no savings to fall back on at all. Whether buying a home or remortgaging, higher monthly repayments leave households increasingly exposed if life takes an unexpected turn – making financial protection more important than ever”.
Ben Thompson, Director of Home Moving Strategy, Mortgage Advice Bureau:
“Holding the base rate at 3.75% is the Bank of England playing it safe rather than picking a side. That said, it doesn’t answer the question of where rates are going – it just kicks it a little further down the road.
“A rate hold might sound reassuring as a first time buyer, but all it really tells you is that the Bank hasn’t made its mind up. If you’ve got an offer sitting in front of you, don’t just assume today’s calm is the new normal. Go and check whether it’s actually still the most suitable one you can get.
“Remortgaging is a slightly different game. What you’re offered comes down to what that specific lender thinks happens next, not what’s just been announced, and right now, they’re as split as the Bank is. If your deal’s coming to an end soon, it’s worth actually finding out where you stand, rather than guessing off the back of a headline figure.
“If you’ve got plans to move home soon, don’t let this throw them off course. Build a bit of wiggle room into your numbers, since ‘no change’ from the Bank doesn’t mean nothing changes for you between now and moving in.
“No one can say for certain what the Bank does next. What you can do is make sure your homebuying plans factor in every possibility – and that’s exactly where an adviser comes in. Knowing what the latest decision means for you and your budget specifically is the bit that takes a proper conversation, not a headline.”
Interest rates unchanged, but households shouldn’t become complacent
Commenting, Charlotte Kennedy, Chartered Financial Planner at Rathbones, one of the UK’s leading wealth and asset management groups, says: “The decision to hold interest rates comes as little surprise. The Bank of England is still assessing how much of the recent energy shock linked to the conflict in the Middle East will feed through to the wider economy.
“The key question for policymakers is whether higher energy costs become embedded in broader domestic price pressures and wages. For now, underlying inflation pressures appear relatively contained, with core inflation remaining steady and wage growth continuing to cool. That has given the Bank scope to leave rates unchanged while it gathers more evidence.
“For homeowners on tracker mortgages, today’s decision offers some welcome breathing space, while savers may continue to benefit from competitive savings rates for a little longer. Those with a longer-term horizon may also want to consider investing as part of a broader financial plan, as it offers the potential for higher returns over time, albeit with greater risk.
“The outlook remains uncertain, and economic shocks have a habit of arriving uninvited. The best defence is not trying to second-guess the Bank’s next move, but making sure your finances are robust enough to weather whatever comes next. That could mean strengthening emergency savings, paying down expensive debt and ensuring longer-term money is working hard enough to keep pace with inflation and support future financial goals.”
Commenting on the base rate hold, Katie Horne, savings expert at Flagstone, says:
“The options available to savers have never been greater* and a sustained 3.75% base rate helps ensure a bumper proportion of savings accounts can offer savers inflation-beating returns. The breadth of options available right now gives savers and businesses much-needed time and space to choose the best savings accounts for their individual needs, and ensure their funds are adequately diversified and spread out for maximum income potential and minimum risk.
“Savers should remember that many banks and building societies will have priced in the expectation of a base rate hold into the returns they are offering. This means that while savings rates won’t necessarily rise in the short term, they are less likely to fall. This keeps competition among savings providers high, creating a buoyant market for savers.
“However, another vote to hold the base rate steady doesn’t help people struggling with high living costs. A hold won’t encourage banks to lower mortgage rates nor reduce the cost of personal and business loans.
“A base rate hold may go some way to help curb inflation, which is something to be grateful for as we roll into Autumn on a tide of surging energy costs. Energy is not a discretionary cost. We have no choice but to heat (or cool) our homes, run our cars, and cook food for our families. With the cost of oil sitting comfortably above $100 a barrel, soaring energy prices in the run-up to winter will pile fresh financial pressure on British households.”
* https://moneyfactscompare.co.uk/news/savings/savers-handed-boost-as-fixed-rates-soar/
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