The Bank of England has opted to hold interest rates steady at 3.75% after its latest Monetary Policy Committee meeting, signalling a pause in any immediate policy shifts.
Officials are balancing persistent inflationary pressures against a cloudier economic outlook, shaped in part by rising geopolitical risks. Escalating tensions in the Middle East, including the ongoing conflict in Iran, have unsettled markets and driven up oil prices, adding to the uncertainty.
The rate of inflation remains above the 2% target, at 3.3%, but policymakers reached a unanimous decision to adopt a cautious, wait-and-see approach as they assess the potential duration and impact of the situation.
However, despite holding interest rates steady today, the Bank of England signalled that borrowing costs are likely to rise, with the potential for what it described as “forceful” increases.
Industry reaction:
Emily Willaims, director of research at Savills: “Many will be breathing a sigh of relief that there was strong consensus from the MPC today to hold rates, despite mounting inflationary pressures.
“Transaction data released today points to a degree of resilience in the housing market. Most of these deals are likely to have been agreed before the escalation of the conflict in the Middle East, but this highlights an undercurrent of demand that could re‑emerge if conditions improve. While several lenders have cut rates in recent days to remain competitive, buyers are expected to sit on their hands until greater clarity emerges.
“The path to lower interest rates now looks increasingly uncertain, pointing to a housing market that will remain highly price‑sensitive. The true impact on activity is likely to become clearer in the coming months, as mortgage offers agreed prior to the conflict begin to expire and buyers reassess affordability.”
Kevin Shaw, national sales managing director, LRG: “Today’s decision to hold interest rates is the news many buyers, sellers and agents were hoping for. It does not remove uncertainty from the market, but it does remove an immediate threat.
“The Bank had a difficult decision to make against an unusually unsettled backdrop. The on-off ceasefire in Iran is changing by the day and the interest rate outlook has turned turtle in a remarkably short period: just two months ago we expected two interest rate cuts; since the war in the Middle East began, two rises over the course of the year appeared a likely scenario.
“The important point is that the situation looks less fragile than a month ago. Assuming the Middle East situation does not escalate, today’s hold suggests some easing of concern around the path of rates for the rest of the year. The fears of further rises being discussed in early March now feel less certain.
“From LRG’s perspective, the property market has remained resilient. Buyer activity and sales held up well throughout April, instructions are 5% higher and we are continuing to see momentum despite the wider uncertainty. Today’s decision should help sustain that confidence.”
Nathan Emerson, CEO at Propertymark: “Considering current tensions worldwide, it is reassuring to see base rates held steady. For those on the property ladder or thinking of approaching the buying and selling process, today’s news brings a sense of relief across the coming months.
“However being realistic in sentiment, we currently sit in the middle of a sensitive situation where many households haven’t yet fully recovered from issues connected to the cost of living. While it may genuinely feel the pressure is still on regarding affordability, it is hoped as tensions de-escalate globally, we will proceed to a more confident footing which offers more robust levels of household affordability for consumers within the long-term journey of purchasing a property.”
Verona Frankish, CEO of Yopa: “The property market hasn’t stalled, it’s simply found a more sustainable rhythm and today’s decision to hold the base rate will only help sustain this measured level of momentum moving forward.
“As the year progresses, we expect this steady level of activity to continue, with the prospect of rate reductions later in the year likely to provide a further boost to market confidence.”
Nigel Bishop of Recoco Property Search: “With inflation on the rise and ongoing political uncertainty, a rate cut was highly unlikely. Some mortgage-dependent buyers might decide to stall their search for the time being whilst others; particularly cash buyers; will cease the opportunity of a less competitive property market.”
Chris Hodgkinson, managing director of House Buyer Bureau: “Another hold on interest rates is unlikely to do much to lift property market sentiment.
“The market is already treading with great caution against a backdrop of economic and geopolitical volatility and, while today’s decision provides a degree of certainty, it also prolongs the current sense of inertia.
“Buyers and sellers have been waiting for a clearer signal that borrowing costs are on the way down and, without it, many will continue to sit tight. As a result, this ongoing hold risks sowing further uncertainty into a market that’s already lacking confidence and it certainly won’t be enough to jump-start activity.”
Nicholas Mendes, mortgage technical manager, John Charcol: “A hold should not be mistaken for a sign that the Bank is relaxed about the outlook. This is still a difficult backdrop, with inflation pressure picking up again while growth remains weak and the labour market shows signs of softening.
“For mortgage borrowers, a hold does not automatically mean mortgage rates are about to fall. Fixed mortgage pricing is driven more by swap rates and lender funding expectations than by Bank Rate alone. If markets still believe rates may need to move higher later in the year, lenders are likely to remain cautious.
“We may still see selective cuts where individual lenders want to compete, or where funding costs ease for a period, but borrowers should be careful not to read that as a sustained downward trend.”
Guy Gittins, CEO of Foxtons: “Following the increase in inflation to 3.3% this month, a hold on the base rate provides a welcome degree of stability for the property market. It also gives buyers greater certainty around borrowing costs when making long-term financial decisions.
“The market isn’t moving at the same pace as 2025, due to the Q1 boost we experienced last year from the stamp duty holiday ending. When compared to 2024, we’re seeing a stable and improving landscape, with resilient buyer interest and viewing numbers at Foxtons up in April when compared to March 2026.”
