Bank of England Holds at 4%! Borrowers Could Save Up to £3,500 on a Tracker Mortgage

The Bank of England has maintained the base interest rate at 4%, signalling that UK inflation has peaked at 3.8%. The Monetary Policy Committee (MPC) voted 5-4 to hold rates, showing that a reduction to 3.75% could happen soon. For homebuyers, investors, and contractors, this decision highlights a critical window to act before borrowing costs potentially fall.

The MPC decision reflects caution while indicating the likelihood of future rate cuts. Four policymakers voted for a 0.25% reduction, meaning the Bank Rate is on a gradual downward path if inflation continues to ease toward the 2% target. Governor Andrew Bailey emphasised that rates will only be reduced once inflation is firmly on track, keeping borrowers alert to changes in the coming months.

September’s inflation figures were lower than expected at 3.8%, compared with analysts’ forecasts of 4%. While this suggests price pressures have peaked, inflation remains almost double the Bank’s 2% target. The Autumn Budget, expected later this month, could also influence the timing of future rate cuts, as Chancellor Rachel Reeves may implement new fiscal measures totalling £38bn, adding uncertainty for borrowers.

Impact on Borrowers and Market Timing

Even a 0.25% rate cut could reduce monthly repayments significantly for variable-rate and tracker mortgage holders. For contractors, first-time buyers, and property investors, acting now could secure more favourable borrowing terms and improve overall affordability. With rates potentially moving soon, planning mortgage strategies in advance has never been more important.