Bank of England base rate stays at 5.25% and avoids 15th consecutive increase

by Aaron Strutt

Sep 21 2023

The Bank of England base rate has been left unchanged at 5.25% in a surprise move after it had been widely expected to increase.

At its meeting ending on 20 September 2023, The Bank of England’s Monetary Policy Committee voted by a majority of 5–4 to maintain Bank Rate at 5.25%.

Four members preferred to increase Bank Rate by 0.25 percentage points, to 5.5%. The Committee also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100 billion over the next twelve months, to a total of £658 billion.

Andrew Bailey, Governor of the Bank of England, said: "Inflation is falling and we expect it to fall further this year. Our previous increases in interest rates are working but let me be clear inflation is still not where it needs to be and there is no room for complacency. We will need to keep interest rates high enough and for long enough to ensure we get the job done."

The previous 14 times the Bank made a decision, it opted to increase the rate, starting at the end of 2021.

What will happen to mortgage rates?

Lenders are lowering their rates as they look to provide more competitively priced fixes and trackers. There are now a few lenders offering either sub-5% five or seven-year fixes and some reasonable tracker rates without exit fees.

Mortgage rates need to be closer to four per cent to bring more confidence back to the market. There certainly isn’t a full-on rate war at the moment, but rates are coming down as the price of funding fixed-rate falls.

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The information contained within was correct at the time of publication but is subject to change.

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