Bank of England Holds Bank Rate at 3.75%: What It Means for Mortgages and Savings
The Bank of England kept Bank Rate at 3.75% at its meeting ending on 17 June 2026. The Monetary Policy Committee voted by a majority of seven to two to leave the rate unchanged. Two members preferred an increase to 4%.
Latest position: This information was checked on 29 July 2026. The next Bank of England interest rate decision is scheduled for 30 July 2026, so the official Bank Rate page should be checked for any later change.
What Is the Bank of England Base Rate?
Bank Rate, commonly called the base interest rate, is the rate paid by the Bank of England to commercial banks and building societies that hold money with it. It also influences the cost of borrowing across the UK.
When Bank Rate changes, it can affect:
- Tracker and variable mortgage rates
- New fixed mortgage pricing
- Personal loans and credit
- Savings account interest
- Business borrowing
- Consumer spending and inflation
Simple explanation: A higher Bank Rate normally makes borrowing more expensive and encourages saving. A lower rate can reduce some borrowing costs, but it may also reduce the interest paid on savings.
Latest Interest Rate and Inflation Position
| Measure | Latest Position |
|---|---|
| Bank Rate | 3.75% |
| June 2026 decision | Held unchanged |
| Committee vote | Seven voted to hold and two voted to increase |
| June 2026 CPI inflation | 2.6% |
| Inflation target | 2% |
| Next scheduled decision | 30 July 2026 |
Why Did the Bank Keep the Rate at 3.75%?
Inflation Was Falling but Remained Above Target
UK CPI inflation fell from 2.8% in May to 2.6% in June 2026. This was a positive movement, but inflation remained above the 2% target used by the Bank of England.
Energy Prices Remained Uncertain
Energy prices had fallen from earlier peaks but remained volatile. The Bank was concerned that higher energy costs could affect transport, household bills, business costs, wages and future price increases.
The Economy Was Showing Signs of Weakness
Demand remained subdued and the labour market was becoming weaker. These conditions can reduce inflation because households and businesses have less ability to increase spending and prices.
Existing Borrowing Costs Were Already Restricting Spending
Interest rates faced by households and businesses remained high. The Bank judged that these borrowing costs were already helping to reduce demand and control inflation.
How Does an Unchanged Bank Rate Affect Mortgages?
| Mortgage Type | Likely Immediate Effect |
|---|---|
| Existing fixed-rate mortgage | Monthly payments normally remain unchanged until the fixed period ends. |
| Tracker mortgage | The rate normally remains unchanged when Bank Rate is held, subject to the product terms. |
| Standard variable rate | The lender decides whether and when to change the rate. |
| New fixed-rate mortgage | Pricing can still move because fixed rates depend heavily on swap rates and lender funding costs. |
| New remortgage deal | Available rates may increase or decrease even when Bank Rate remains unchanged. |
Existing Fixed-Rate Mortgage Customers
If a mortgage is already fixed, the monthly payment normally stays the same until the fixed period ends. An unchanged Bank Rate does not usually affect the payment during that period.
However, borrowers approaching the end of a fixed deal may find that current remortgage rates are higher than the rate they previously secured.
Tracker Mortgage Customers
A tracker mortgage normally follows Bank Rate plus a fixed lender margin. For example, a tracker priced at Bank Rate plus 0.75% would remain at 4.50% while Bank Rate remains at 3.75%.
The exact timing of any future payment change will depend on the mortgage terms.
Standard Variable Rate Customers
A standard variable rate is controlled by the lender. It may be influenced by Bank Rate, but the lender does not have to change it by the same amount or at the same time.
Borrowers on a standard variable rate should check whether another available mortgage product would change their overall cost, including fees and early repayment charges.
New Buyers and Remortgagers
Fixed mortgage rates do not follow Bank Rate directly. They are influenced by swap rates, market expectations, funding costs, competition and lender pricing decisions.
This means fixed mortgage rates can rise even while Bank Rate remains unchanged. Santander, for example, increased most new business fixed rates on 29 July 2026 despite Bank Rate remaining at 3.75% at the latest published decision.
Important: A Bank Rate hold does not guarantee that mortgage deals will remain unchanged. Mortgage products can be repriced or withdrawn with little notice.
How Mortgage Rates Affect Monthly Payments
Consider an illustrative £250,000 repayment mortgage over 25 years.
| Mortgage Rate | Estimated Monthly Payment |
|---|---|
| 4.50% | Approximately £1,390 |
| 5.00% | Approximately £1,461 |
A difference of 0.50 percentage points would increase the estimated payment by approximately £72 per month. The actual payment depends on the mortgage amount, term, fees and repayment method.
What Does the Rate Hold Mean for First-Time Buyers?
- Mortgage affordability remains sensitive to the rate offered by the lender.
- A larger deposit may provide access to a lower LTV band and different mortgage products.
- Buyer budgets should include mortgage fees, Stamp Duty where applicable, legal fees, surveys and moving costs.
- Monthly payments should be tested against possible future rate increases.
- An Agreement in Principle is not a guaranteed mortgage offer.
What Does It Mean for Home Movers?
Home movers should check whether an existing mortgage can be transferred to the new property through mortgage porting. Porting remains subject to lender affordability checks, property suitability and current lending criteria.
Any additional borrowing may be placed on a different rate, creating more than one mortgage product with separate end dates and conditions.
What Does It Mean for Savers?
An unchanged Bank Rate can help support savings rates, but banks and building societies decide what interest they pay. Providers may reduce savings rates even when Bank Rate remains unchanged.
Savers should compare:
- Easy-access savings rates
- Fixed-term savings accounts
- Withdrawal restrictions
- Introductory rates and expiry dates
- Financial Services Compensation Scheme protection
High and Low Interest Rates Compared
| Area | Higher Interest Rates | Lower Interest Rates |
|---|---|---|
| Tracker mortgages | Payments usually increase | Payments usually decrease |
| New fixed mortgages | Often more expensive | May become cheaper |
| Savings accounts | May pay more interest | May pay less interest |
| Buyer affordability | Borrowing can become harder | Borrowing may become easier |
| Inflation | Can help reduce spending and price pressure | Can encourage spending and demand |
What Should Mortgage Borrowers Do?
- Check the end date of the current mortgage deal.
- Review available products several months before the fixed period ends.
- Compare rates, product fees, cashback, APRC and early repayment charges.
- Calculate payments using more than one possible interest rate.
- Avoid assuming that a future Bank Rate reduction is guaranteed.
- Contact the lender early if mortgage payments may become difficult.
- Use an FCA-authorised mortgage adviser when personalised mortgage advice is required.
Quick Summary
- The Bank of England held Bank Rate at 3.75% in June 2026.
- Seven committee members voted to hold and two voted to increase the rate to 4%.
- UK CPI inflation fell to 2.6% in June but remained above the 2% target.
- Existing fixed mortgage payments normally remain unchanged until the deal ends.
- Tracker mortgage payments usually stay unchanged while Bank Rate is held.
- New fixed mortgage rates can still move because they depend on wider financial markets.
- The next Bank Rate decision is scheduled for 30 July 2026.
Simple takeaway
Bank Rate remained at 3.75%, but this does not mean every mortgage or savings rate will stay the same. Borrowers should check the latest lender products and calculate the complete cost before making a decision.
Official information: Bank of England June 2026 decision, Current Bank Rate and ONS UK inflation figures.