Interest rates hold at 4.5% – consumer credit industry reaction

The Bank of England has announced that it has held the base rate at 4.5%.

The rate-setting Monetary Policy Committee voted in a 8 to 1 split in favour of holding the rate, one member preferred to reduce the bank rate by 0.25 percentage points, to 4.25%.

The bank rate was cut from 4.75% to 4.5% in February after being held at 4.75% at the end of 2024.

Commenting on the MPC’s decision not to change the Bank Rate from 4.50%, Andrew Gall, Head of Savings and Economics at the Building Societies Association (BSA) said “It was no surprise that today the MPC decided to hold the Bank Rate at 4.50%, after the 25 basis point cut last month. We still expect rates will continue a downward trend this year, with probably two or three more cuts by December.

“Our latest Property Tracker Report shows that the vast majority of mortgage borrowers are not concerned about maintaining their mortgage payments over the next six months. However, anyone who is concerned that they may experience financial difficulties should contact their lender as soon as possible, preferably before missing any payments. Lenders have a range of practical, tailored support available to anyone who may be struggling.”

Simon Webb, Managing Director of capital markets and finance at LiveMore, said “The Bank of England’s decision to hold the base rate was expected, and while a cut would have been welcomed by many borrowers, stability is key for market confidence and we remain optimistic that rate reductions will come in time, providing further support to homeowners and buyers.

“For the later life lending market, the outlook remains positive. Demand for specialist mortgage products continues to grow as more people seek flexible solutions to meet their financial needs in later life. Regardless of short-term rate movements, this sector is set for sustained expansion as awareness increases and lenders continue to innovate. As we look ahead to the Spring Statement, we hope to see policies that further support borrowers and homeownership, particularly for those in later life.”

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “No news isn’t good news for mortgage holders, who’ll need to wait longer for cuts. The slightly better news is that fixed rates have inched down in recent weeks. And while we’re not expecting anything significant in the immediate future, overall rates are expected to trend downwards over time. The HL Savings & Resilience Barometer shows that mortgage payments tend to rise with income, so the top 10% of earners have average monthly payments of £1,322 and have the most to gain from this trend.

“Short-term movements are hard to predict at a time when there’s so much uncertainty in the global economy. So rather than trying to second guess what Donald Trump plans for tomorrow, if you have a remortgage coming a few months down the track, it’s a good idea to secure a rate as early as possible. That way, if rates rise in the interim, you’ve locked in a cheaper deal, and if they fall, you can shop around for something better closer to the time.”

Ryan Etchells, Chief Commercial Officer at Together, said “It’s disappointing but expected that the Bank of England has employed a wait-and-see strategy by holding rates, rather than providing a much-needed boost to UK borrowers, investors, developers and SMEs.

“This week, the OECD downgraded its growth forecasts for the year from 1.7 per cent to 1.4 per cent as inflationary pressures, and global trade war threats persist, so some caution from the Bank on the decision to hold rates is understandable. However, borrowing costs will remain high, which will do nothing to kick start the sluggish UK economy and support the very businesses that will provide the momentum nor stimulate the housing market previously identified as a key priority for the Government.

“Looking ahead, we’d expect to see at least two further base rate reductions in 2025, although maybe at a slower pace than most economists previously predicted. We also have the highly anticipated Spring Statement next week, and it’s absolutely crucial the Chancellor focuses on boosting the UK economy, whether through reforms such as reversing changes to stamp duty or cutting business rates to unlock growth potential.”

John Phillips, CEO of Just Mortgages and Spicerhaart, said “Even the most avid supporter of rate cuts likely saw today’s decision coming – as did the financial markets with many already pricing in this outcome. As is often the case, it also mirrors yesterday’s decision by the Fed to keep interest rates unchanged amid similar economic uncertainty, slowing growth and higher inflation. We continue to hold our breath that future cuts are indeed coming, although like our US counterparts, the pace and frequency depends entirely on the economic outlook at home and abroad, and inflation dynamics – which in the UK remains sticky and highly volatile.

“Future cuts couldn’t come soon enough in a mortgage and property market that is still battling clear affordability challenges, not helped by the upcoming change to stamp duty thresholds. On top, we prepare for any potential surprises that may come in the Spring Statement next week. Thankfully, lenders continue to play their part to support borrowers and from our perspective, there is still appetite within the market with buyer registrations, valuation requests and mortgage appointment numbers all remaining consistent. It’s encouraging to see there is still a clear demand for advice and advisers will continue to play a pivotal role as clients try to navigate an ever-changing market landscape.”

Paul Noble, CEO of Chetwood Bank, said “This decision was unlikely to surprise, with inflation still proving hard to rein in and the central bank remaining cautious about the road ahead. While many had hoped for a consecutive cut, today’s announcement reinforces the view that rate reductions will be a gradual process throughout the next year or so rather than an immediate shift.

“With the Chancellor’s Spring Statement on the horizon and inflation still unpredictable, the economic outlook remains uncertain. A stabilised base rate means no immediate relief, but for savers, it extends the window to secure competitive rates before any future cuts materialise. Acting now to lock in strong returns could make a meaningful difference in the months ahead.

“With financial conditions still in flux, consumers must act decisively to secure the best options for their savings and investments. Now is the time to review financial plans and make sure savings and investments are in their best position as today’s changes take place.”