Interest rates stay at 4% – consumer credit reaction

The Bank of England has held the base rate at 4% which affects a wide range of consumer loan agreements from credit card to mortgage payments.

Commenting on the MPC’s decision not to change the Bank Rate from 4%, Andrew Gall, Head of Savings and Economics at the Building Societies Association (BSA) said “Many aspiring homebuyers will be disappointed that the MPC has decided to hold the Bank Rate at 4.00% for another month.

“Despite innovative mortgages from building societies to help those with smaller deposits, and recent regulatory changes giving lenders increased flexibility to support borrowers, mortgage affordability remains one of the biggest barriers to homeownership. Our research shows that over half of first-time buyers (54%) say the cost of monthly mortgage repayments is an obstacle to becoming a homeowner. Mortgage repayments for new first-time buyers are now around 30% higher than in 2020 (22% of income vs 18%). This has led to the dream of homeownership turning into a sense of defeat, with almost one in three (29%) of those wanting to buy a home believing they never will.

“Whilst CPI Inflation remains high at 3.8%, it has not risen as much as feared and the Bank estimate it has peaked. A cut to the Bank Rate just before Christmas is therefore on the cards, although policies announced in the Autumn budget will also factor in the MPC’s next decision.”

John Phillips, CEO of Just Mortgages and Spicerhaart, said “Given the central bank’s penchant for caution, a cut to the base rate felt unlikely this close to the Budget. There was certainly scope for one though with recent inflation data performing better than expected and growing confidence that it has likely reached its peak. Add in the gloomy economic picture and you can certainly make a strong argument. As has been the case in recent months, the Budget is the elephant in the room and the unpredictability surrounding it is understandably irking rate setters. Whether we’ll see an early Christmas present from the MPC next month is still hard to predict with any real confidence.

“Even so, there have been plenty of positive headlines coming out of the mortgage market with a drop in rates and cuts from lenders in all areas of the market. Resilient mortgage approvals and transaction figures show many borrowers are still getting on with the task at hand – despite much noise surrounding the Budget. Brokers should absolutely take note and be there to provide the necessary advice and support. Above all, we shouldn’t underestimate the critical role we play in nurturing confidence and facilitating transactions.”

Simon Webb, Managing Director of Capital Markets and Finance at LiveMore said “The Bank of England’s decision to hold the base rate at 4% is not unexpected considering the current economic climate. With headline inflation trending lower than expected some analysts had predicted a quarter point drop, and the voting split shows how close the decision was. But with inflation still above target and wage growth high, the Bank has held firm. With the next MPC meeting on 18th December, however, borrowers will be hoping for an early Christmas present with a rate reduction.

“For older borrowers, many of whom are on fixed incomes, stability in the market is what’s required so they can make longer-term decisions about their financial needs. However, with Rachel Reeves this week dropping her biggest hint yet that tax rises are inevitable, it will be a nervous wait to see what comes out of the budget.

“At LiveMore, we’re committed to supporting this demographic with lending solutions that go beyond traditional criteria. We want to see the Government support a more flexible lending environment that recognises the diversity and complexity of later life finances. This includes smarter regulation, innovation in product design, and a shift in the industry mindset about what older borrowers can and should be able to do.”

John Fraser-Tucker, Head of Mortgages at online mortgage broker, Mojo Mortgages,said “The Bank of England’s (BoE) decision to hold the base rate at 4% on November 6th 2025 means caution is warranted: the BoE is signalling it’s not yet comfortable with cutting further.  For existing mortgage holders due to review their existing deals there is little change being offered in the rate market. We can expect relative stability barring any macro events that shake the funding markets, noting of course a well anticipated Autumn Budget on November 26th.  For First Time Buyers, although there is no immediate relief on expected rate reductions, there is some optimism with hints of reductions to come.  The window for active purchases is closing however with the seasonal December slow-down imminent, this may place more pressure on an already stagnant sale and purchase market with many perhaps opting to see where we are in the new year.”

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “A hold means borrowers with tracker rates will have to play the waiting game, but those in the market for a new fixed deal don’t have to wait for the good news. We’ve already seen fixed rates cut by the big banks in recent days, and the fact the vote was so close will cement expectations of rate cuts sooner rather than later, so this may not be the last of the cuts.

This is excellent news for anyone facing a remortgage or looking to secure a deal for a house move, who should be able to track down a decent rate. The HL Savings & Resilience Barometer shows that average monthly mortgage payments peak in our early forties, so this should be a real boom for anyone facing a squeezed middle age. If you’re remortgaging, it’s worth securing a rate as soon as possible, so if mortgage rates continue to drop you can find a better deal elsewhere, and if they surprise on the upside, you’ve already locked a great rate in.”