The UK base rate remains at 3.75%, after the Bank of England voted to hold rates at its latest Monetary Policy Committee meeting on 30 July 2026. The decision comes as UK inflation sits at 2.6%
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The Bank of England has held the base rate at 3.75%, keeping borrowing costs unchanged following its latest interest rate decision.
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Holding the base rate steady provides some stability for mortgage rates, although the cost of borrowing remains an important factor for buyers and homeowners looking to move or remortgage.
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The base rate, also known as the ‘Bank Rate’ or ‘interest rate’, influences the rates mortgage lenders charge borrowers.
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The decision comes as UK inflation fell to 2.6% in June, down from 2.8% in May and moving closer to the Bank of England’s 2% target.
The Bank of England has held the base rate at 3.75%, leaving interest rates unchanged at its latest meeting on 30 July 2026.
The base rate, also known as the ‘Bank Rate’ or ‘interest rate’, is important because it influences the rates lenders charge borrowers for products such as mortgages.
Why has the base rate been cut?
The Bank of England has been using interest rates to bring inflation back towards its 2% target.
The latest figures from the Office for National Statistics (ONS) show that UK CPI inflation fell to 2.6% in June 2026, down from 2.8% in May and lower than the Bank had expected.
However, the Bank remains cautious. Energy prices have been higher and more volatile due to conflict in the Middle East, which could push inflation back up later this year.
At its July meeting, the Bank’s Monetary Policy Committee (MPC) voted 6-3 to keep the base rate at 3.75%, with three members voting to increase it to 4%.
This is the lowest cut from the Bank of England since March 2023.
Breakdown by month:
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March 2026: 3.0%
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April 2026: 3.0%
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May 2026: 2.8%
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June 2026: 2.6%
Inflation is now moving closer to the Bank of England’s 2% target, but uncertainty around energy prices means the Bank is taking a cautious approach to future interest rate decisions.
What could happen to interest rates in 2026?
With the base rate remaining at 3.75%, attention now turns to what the Bank of England might do next.
Falling inflation provides some encouraging signs, but the Bank has warned that higher energy prices could cause inflation to rise again later this year.
That means future decisions are likely to depend heavily on how inflation, energy prices and the wider economy develop over the coming months. The next Bank of England interest rate decision is due on 17 September 2026.
What does the latest base rate cut mean for your mortgage?
So what does the decision to hold rates mean if you’re thinking about buying, moving or remortgaging?
If you’re on a tracker mortgage, your rate typically moves in line with the base rate. Because the Bank Rate has stayed at 3.75%, you’re unlikely to see an immediate change to your monthly repayments as a direct result of this decision.
If you’re approaching the end of a fixed-rate mortgage, it’s still worth shopping around. Fixed mortgage rates are influenced by financial markets and expectations for future interest rates, rather than simply moving directly alongside the Bank Rate.
Speaking to a mortgage broker can help you understand the deals available and what they mean for your budget.
How could this impact the housing market more broadly?
Higher mortgage costs and wider uncertainty have contributed to a slower summer housing market.
Sales agreed are currently 9% lower than a year ago, while UK house price growth has slowed to 1.3%.
Buyers do have more choice, however. The number of homes for sale has increased across most regions, giving buyers greater negotiating power and putting more pressure on sellers to price their homes realistically.
Mortgage rates have also fluctuated this year. After falling from almost 5% in April to around 4.65% in June, average rates edged back towards 4.75% in July.
Holding the base rate at 3.75% provides some stability for borrowers, but mortgage affordability remains an important factor for buyers.
Looking ahead, greater stability in mortgage rates could help support activity as we move into the autumn market. For buyers considering a move, understanding what you can afford and speaking to a mortgage broker about the latest deals remains an important first step.
