BBC News feed - Ups and downs of mortgage rates are tricky to predict

The Bank of England has held Bank Rate at 3.75%, with the next decision due on 18 June 2026. The Monetary Policy Committee voted 8–1 to keep rates unchanged, while Chief Economist Huw Pill voted for a rise to 4%.

The key reason for the cautious decision is the war in the Middle East, which has pushed up energy prices and is expected to feed through to higher petrol, diesel, utility and business costs. Inflation has already risen to 3.3%, above the Bank’s 2% target, and the Bank expects it to rise further this year.

For mortgage borrowers, the message is that rate cuts now look less likely in the near term. The Bank says monetary policy cannot directly reduce global energy prices, but it can act if higher prices start to become embedded through wage demands and businesses raising prices.

Andrew Bailey’s video comments

Andrew Bailey said the Bank thought holding rates was “a reasonable place” given the state of the economy and the uncertainty caused by events in the Middle East. He said the war was causing inflation to rise again and that the Bank would monitor the impact on the UK economy closely. His key reassurance was that “whatever happens,” the Bank’s job is to make sure inflation returns to the 2% target once the initial impact of higher energy prices has passed.

He also warned that deciding whether to raise rates would be a “difficult judgement call”. Waiting for completely conclusive evidence of persistent inflation could mean acting too late, but he stressed that the Bank was not sending a hidden signal that interest rates definitely need to rise.

1. Why has the Bank held interest rates at 3.75%?
   Because the MPC wants more evidence on how the energy price shock will affect inflation, wages, prices and economic growth.
2. Why is inflation rising again?
   The Bank points to the Middle East conflict disrupting energy supply, raising fuel costs and likely increasing utility bills and business costs.
3. Could interest rates rise next?
   Yes, if higher energy costs trigger lasting “second-round effects”, such as firms raising prices and workers seeking higher pay. But the Bank has not committed to a rise.
4. What does this mean for households and mortgage borrowers?
   Borrowing costs may remain higher for longer, and the path of mortgage rates is now more uncertain than it appeared earlier in the year.
5. When could rates fall?
   The Bank’s latest language suggests cuts are unlikely until there is clearer evidence that inflation is returning sustainably to 2%.

What does this mean for mortgage rates?

For mortgage clients, the key takeaway is that the Bank of England has moved into a wait-and-see phase. Borrowers hoping for imminent rate cuts may need to reassess their plans, particularly if they are remortgaging in the next few months. Fixed-rate mortgage pricing could remain volatile as markets react to energy prices, inflation expectations and signals from the Bank ahead of the June decision. Tracker rates look like a better bet, at least over the shorter term.

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7016 0790 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change. It is for general information purposes and is not advice.

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