The Bank of England’s (BoE) Monetary Policy Committee (MPC) met today (Thursday 19th March) and announced its decision to hold the Base Rate at 3.75%, citing continued inflation risks and heightened geopolitical uncertainty.
The committee voted unanimously in favour of holding the rate.
Following the MPC’s previous decision to hold rates at 3.75% in February, and with ongoing tensions in the Middle East contributing to inflationary pressures, today’s outcome had been widely anticipated by economists and market analysts, for the last couple of weeks.
Sylwia Hubar, a UK economist at banking group Natixis, said:
“Significant risks persist, particularly from the Middle East conflict. Should this conflict continue, potentially fuelling inflation while adversely affecting economic growth, the Bank of England may ultimately keep the Bank Rate unchanged this year.”
The next MPC meeting is scheduled for 30 April 2026.
Why have the MPC held rates?
The decision to hold the Base Rate reflects the Monetary Policy Committee’s cautious approach as it balances slowing economic growth with persistent inflation risks.
A key contributing factor at this meeting is continued geopolitical uncertainty, particularly the conflict in the Middle East. Disruptions to global energy markets have pushed oil prices higher, raising the possibility that inflation could remain above the Bank of England’s 2% target for longer than previously expected.
Alongside these inflationary pressures, the UK’s economic outlook has softened slightly. The government’s latest forecasts suggest economic growth of 1.1% in 2026, down from the 1.4% projection made in the Autumn Budget in November 2025. While slower growth can help reduce inflationary pressure, it highlights the challenge policymakers face in controlling inflation without weakening economic activity too significantly.
Looking further ahead, the Office for Budget Responsibility (OBR) expects growth to recover modestly beyond 2026, forecasting 1.6% growth in both 2027 and 2028, which is slightly higher than previous projections of 1.5%. Although this suggests a gradual improvement in economic conditions, inflation is still expected to take time to return sustainably to the government’s 2% target, with current projections indicating this may not be fully achieved until 2027.
Against this backdrop of persistent inflation risks, geopolitical uncertainty and softer economic growth, the MPC has chosen to keep interest rates unchanged for now. Additionally, given the current domestic and geopolitical environment, the outlook for future changes to the base rate remains uncertain and will depend on how inflation and broader economic conditions develop.
How will the base rate hold affect my mortgage?
For mortgage borrowers, today’s announcement means there will likely be no immediate change to monthly payments as a direct result of the Base Rate decision.
- Borrowers on tracker or variable-rate mortgages linked directly to Base Rate will see their monthly repayments remain unchanged for now.
- Those on fixed-rate mortgages will also see no short-term impact, as their interest rate will be locked in until the end of their current deal.
However, borrowers approaching the end of a 5-year fixed-rate deal will likely find that mortgage rates are higher than those previously held, as the Base Rate was significantly lower at 0.1% for the majority of 2021. In comparison, borrowers approaching the end of a 2-year fixed-rate deal may find that mortgage rates are lower, due to Base Rate decreasing from 5.25% at the beginning of 2024 to the current rate of 3.75%.
Although many lenders have adjusted pricing in anticipation of the Bank of England’s latest decision, mortgage rates continue to be impacted by a range of factors, including market conditions and global fiscal policy.
What is the current outlook of the mortgage market?
In recent weeks, mortgage rates have increased, with some lenders withdrawing products as markets reassess the outlook for inflation and future interest rate cuts. Average two-year and five-year fixed mortgage rates have moved back above 5% in parts of the market, reflecting rising swap rates and continued economic uncertainty.
While the Base Rate decision itself may not lead to immediate changes in mortgage pricing, during periods of uncertainty lenders may adjust pricing more frequently as market conditions change and business levels surpass those expected.
For this reason, reviewing your mortgage arrangements in advance and understanding the options available to you is an essential step for anyone planning to remortgage, move homes, or purchase their first property.
How can Cooper Associates Mortgages help?
At Cooper Associates Mortgages, we continuously monitor interest rates to help ensure our clients secure the most competitive rates available to them.
Once a product has been selected, we continue to track rates on your behalf. If a lower rate becomes available between your mortgage offer and up to two weeks before completion, we will aim to move you onto the new rate wherever possible, helping you benefit from any improvements in the market.
If you are feeling unsure about how the current interest rate environment may affect your mortgage plans, speaking with one of our independent advisers can help. By reviewing your personal circumstances and providing bespoke advice around the options available to you, we can help ensure any homeownership decisions you make are informed and made with confidence.
Get in touch today to book a fee-free, no-obligation consultation and discover how our team can support you in securing the right mortgage for you and your loved ones.
