Bank of England Holds Interest Rates at 3.75%: What It Means for Buyers and Sellers

The Bank of England has decided to keep its base interest rate at 3.75%, marking the fifth consecutive meeting where rates have remained unchanged.

While many expected today’s decision, the Bank also warned it’s prepared to raise rates again if global events, particularly the ongoing conflict in the Middle East, cause inflation to climb more than expected.

For anyone buying or selling a home, the decision means borrowing costs are unlikely to change immediately. However, it also suggests mortgage rates could remain higher for longer than many had hoped.

What happened?

At its July meeting, the Bank of England’s Monetary Policy Committee voted 6-3 to keep the base rate at 3.75%.

Interestingly, three members voted to increase rates to 4%, highlighting that there are still concerns about inflationary pressures.

The Bank said uncertainty around global energy prices, driven by the conflict between the US and Iran, means it’s continuing to take a cautious approach.

Bank of England Governor Andrew Bailey said the Bank’s priority is ensuring any increase in inflation is temporary and that it returns to its 2% target over time.

Why has the Bank held interest rates?

Inflation has fallen significantly from its recent peaks, but policymakers believe new risks have emerged.

Higher oil and gas prices linked to tensions in the Middle East could push inflation back up later this year. At the same time, extreme weather events and continued pressure on global supply chains could also affect food prices.

While the UK economy is expected to grow slightly faster than previously forecast, the Bank believes it’s too early to conclude that inflation is fully under control.

Holding interest rates gives policymakers more time to assess how these global factors develop before making their next move.

What does this mean for mortgages?

Although the Bank’s base rate hasn’t changed, mortgage rates don’t always stay still.

In fact, a number of lenders have increased rates on new fixed-rate mortgage products in recent weeks as markets have adjusted their expectations about future interest rates.

If you’re:

• Already on a fixed-rate mortgage, today’s announcement won’t affect your current monthly repayments until your deal ends.

• Looking for a new mortgage or remortgage, rates may remain relatively stable, but there’s no guarantee they’ll fall in the coming months.

• Buying your first home, affordability remains an important consideration, so it’s worth speaking to a mortgage adviser before making an offer.

As always, shopping around for the best mortgage deal can make a significant difference.

What does it mean for buyers?

The latest decision brings a degree of stability to the housing market.

Many buyers have become accustomed to interest rates remaining at their current level, making it easier to budget and plan their next move.

However, with the Bank signalling that rates could still rise if inflation worsens, buyers may not want to assume cheaper borrowing is just around the corner.

If you’ve found the right property and your finances are in place, waiting for substantially lower mortgage rates may not necessarily pay off.

What does it mean for sellers?

For sellers, today’s announcement means the market is likely to continue much as it has over recent months.

Buyers remain active, but affordability continues to influence their budgets and expectations.

Homes that are realistically priced, well presented and ready to move into are still attracting strong interest, while overpriced properties may take longer to sell.

If you’re thinking about putting your home on the market, understanding local buyer demand and pricing your property accurately remain the biggest factors within your control.

Could interest rates change later this year?

Possibly.

The Bank made it clear that future decisions will depend on how inflation develops over the coming months.

If higher energy prices begin feeding through into wider inflation or wage growth, policymakers have indicated they’re prepared to increase interest rates again.

Equally, if inflation continues to ease and economic conditions remain stable, rates could stay where they are for longer.

The next Bank of England interest rate decision is due on 17 September 2026.

The bottom line

The Bank of England’s decision to hold interest rates at 3.75% provides some short-term certainty for homeowners, buyers and sellers.

However, the accompanying message was clear: while rates remain on hold for now, the Bank is watching inflation closely and won’t hesitate to act if global events begin pushing prices higher again.

Whether you’re buying your first home, remortgaging or preparing to sell, keeping an eye on interest rates is important—but they’re only one part of the picture. Choosing the right property, understanding your budget and making informed decisions remain just as important.

If you’re thinking of moving, book your free house valuation with Purplebricks to find out what your home could be worth in today’s market.