Bank of England HOLD base rate – what does it mean for savers and borrowers?

I don't see any need to change the base rate at this time; mortgage rate increases are purely off higher Swap rates and future expectations of base rate cuts, not the current base rate itself. The external politics of the Middle East war are the primary reason rates have shot up over the last few weeks, and the MPC are quite divided on how to react, as the traditional inflationary pressures of overspending in the high street just don't exist. This will be more about the covering words and bullet points with the decision, as that will point the markets in a certain direction. Mortgage rates have fluctuated by as much as 1% whilst the base rate has remained unchanged; that just demonstrates that market influence is more driven by what is said by the MPC than by the % rate.

The Bank of England's decision to hold the base rate at 3.75% is entirely predictable from a central bank with a long history of following rather than leading. The economy is on its knees. UK business has been hammered by £80bn of tax rises, and entrepreneurs are leaving the country in droves. The number of UK sterling millionaires has dropped 7% in the last year, the lowest count since 2008, yet the Bank remains fixated on inflation that has sat above its 2% target for 24 months, driven largely by Middle East instability and energy prices. No amount of rate rises will stem that tide. For borrowers, the hold brings immediate stability — tracker mortgage payments stay flat, fixed-rate deals are unaffected. For savers, returns remain solid but could soon peak.

Holding rates is the right decision. Businesses don’t need another headline. They need stability. A rate cut may have lifted sentiment, but it wouldn’t change the day-to-day pressures SMEs are facing. For borrowers, it means mortgages and business loans are unlikely to get any cheaper, so cash flow will stay tight. For savers, it means they should continue to benefit from stronger returns. The business owners I speak to aren’t talking about interest rates. They’re talking about rising employment costs, cautious customers and whether now is the right time to invest or recruit. Holding rates won’t solve those problems, but it does provide one thing businesses desperately need, certainty. Confidence drives growth, and confidence starts with stability.

The Bank has made the right call. The economy feels flat rather than fragile, while services inflation remains too sticky to justify an immediate cut. Holding rates provides stability without risking a fresh inflationary pulse.

For borrowers, it's disappointing but not unexpected. Anyone rolling off a cheap fix should budget for higher repayments rather than assume cuts are around the corner. Mortgage costs are likely to stay elevated for a while.

For savers, it's better news. Cash rates should stay attractive yet, but don't assume your bank is paying the best. Loyalty is rarely rewarded, so review your accounts and consider locking in a fix while good ones last.

Overall, the right decision. Cutting into sticky services inflation would have been premature - and right now, dull is exactly what the economy needs.

Stability is worth more than a quarter point, because you cannot underwrite a five-year decision against a moving rate. The clearest sign of that in my office is acquisitions. I have had more clients ask me to look at buying a business in the last six months than in the whole of last year, and government-backed lending has brought buyers back to deals they had shelved. Those deals are priced on the cost of borrowing. A hold is what lets them close. For borrowers, nothing moved, and that is the point. Trackers, overdrafts and acquisition finance stay where they are. But nothing moved at HMRC either. Late payment interest is Bank Rate plus four points, so it holds at 7.75 per cent, and the second payment on account is due tomorrow. For a lot of owners the most expensive borrowing they have is not a mortgage. For savers, the sting is tax rather than rate. The personal savings allowance has been frozen at £1,000 since 2016, £500 at higher rate.