September sees another base rate hold

In July, the hold at 3.75% was the fifth consecutive hold since the base rate was first cut to this figure in December last year. Since then, geopolitical uncertainty surrounding the US-Iran conflict has thrown the market into disarray, with the early spring period seeing a raft of rate increases and product withdrawals.

Today’s base rate decision was voted for by a majority of 6:3, with three members voting to increase it to 4%.

Base rate hold is positive but pressure is building

The market has settled in more recent months from the turmoil at the beginning of the year, but ongoing unrest and high inflation have made it more volatile than usual – in the last couple of weeks, a range of major lenders have implemented rate rises. Moreover, yesterday’s Office for National Statistics (ONS) inflation figures showed an increase to 3.1% in August.

Steve Cox, chief commercial officer at Fleet Mortgages, commented: “On balance, holding BBR at 3.75% feels like the right decision, although yesterday’s inflation figures underline just how much pressure is now building on the MPC. CPI has risen for a second consecutive month, from 2.9% to 3.1%, and with higher oil and gas prices continuing to feed through as the conflict involving Iran and the US persists, the risks clearly remain to the upside. However, increasing BBR would do very little to address inflation being generated by global energy prices, while it would immediately increase costs for borrowers on tracker and variable-rate mortgages. The MPC has therefore chosen to hold its position for now, but if inflation and energy costs continue moving in this direction, the pressure to act is likely to become overwhelming.

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“For the buy-to-let mortgage market, today’s hold certainly should not be interpreted as meaning product rates will stand still, because lenders have already had to respond to higher swap rates and funding costs over recent weeks. Mortgage pricing has effectively been moving ahead of the MPC, although the need for some lenders to build business volumes during the remainder of 2026 could provide some counterweight to those funding pressures.

“For landlords approaching a refinance, there is clearly a need to act, but purchasing landlords should also think carefully about simply waiting for rates to improve, because there is no guarantee they will. Exploring what is available now, and working with an adviser to understand those options, appears far more sensible than trying to predict exactly where pricing might be several months from now.”

John Phillips, CEO of Just Mortgages and Spicerhaart, said: “Even with the news on inflation yesterday, a hold feels like the right call for now. For how much longer, though, is the crucial question. There seems to be no sign of peace or even a truce in the Iran war and while oil prices have eased slightly overnight, they still remain very high and a key driver of inflationary fears. This all feeds into borrowing costs and the volatility in swap rates, helping explain the activity we’ve been seeing from lenders recently. We have to be conscious of the fact that the impact of this conflict will likely feed through for the remainder of the year – even if a resolution is somehow achieved.

“It’s been encouraging to see there are still clients making moves. Alongside a modest jump in buyer registrations and listings so far in September, we are seeing clients reviewing their mortgage options. While there are those needing to make moves, there are those asking the question – perhaps for the first time – about what it means for them and their circumstances. While rates are changeable, there is still plenty of money out there in the market and lenders willing to lend – particularly as we edge closer to their end of year targets. That fact alone could very well encourage some positive activity. Quality advice is absolutely crucial right now and it’s up to us to remind potential borrowers of that.”