Bank of England holds base rate of interest at 4.5% - What does this mean for property?

The Bank of England has announced it is holding the base rate of interest at 4.5% this March. That follows a cut in February and is in line with predictions made at the start of the year.

The Monetary Policy voted to retain the current rate by a majority of 8-1.

While there was some speculation that we would see another cut this March, the Bank of England is responding to global economic uncertainty caused by the political situation in the USA.

Additionally, UK inflation rose to 3% in January which has led to a greater level of caution among policymakers. They are keen to avoid inflation rising quickly once again as it did during and after the Covid-19 pandemic.

In February, the Bank said it expected the rate of inflation to rise to 3.7% and take until the end of 2027 to fall back to its 2% target.

The Bank of England said today about holding the base rate at 4.5%: “Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate.

“The Committee will continue to monitor closely the risks of inflation persistence […] until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.”

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How will rate hold affect mortgage costs?

Unlike previous rate reductions, holding the rate at 4.5% is unlikely to have a major effect on the cost of getting a mortgage in the UK immediately:

• Variable rate mortgages – These will not change if the base rate of interest is not altered. That means prices for those who have a variable mortgage or are looking to get one will be the same as they were last week.
• Fixed-priced products – These are unlikely to change either. Lenders offering a two-year, five-year or longer fixed rate will already have priced this rate hold into their current offers. That means if you are looking at a fixed rate product, the rate being held at 4.25% is unlikely to have any real impact for most borrowers.

For anyone looking to buy UK property, all the reasons that made it a great opportunity yesterday still apply today:

• There is still a shortage of available property
• The number of renters is still higher than ever
• Rents are still at a historic high level
• Property values and rents are still forecast to go up fast in the next four years

Want to learn more about UK buy-to-let property for sale? See our available opportunities today and get in touch with the team.

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What will happen with interest rates over the rest of 2025?

Right now, mortgage rates are already lower than they have been for several years, and they are approximately in line with the historical average. That means it is unlikely we will see a return to the times when interest rates were close to 0%.

However, it is also true that they are likely to fall further over the next 12-18 months. There has been strong speculation since the beginning of 2025 that we will see further cuts to the base rate of interest this year – possibly taking it down to 3.75%.

Some of that cut will already be priced in, but it is likely that we will see cheaper rates come to market by the end of the year that take the whole drop into account. If there are surprise cuts to the base rate beyond that, rates are likely to fall even further.

The next meeting of the Monetary Policy Committee is in May, and in the meantime, you can stay up to date with the UK property market by reading our Market Insights.

Learn more about the UK property market and why you should invest in UK property today by contacting our team of expert advisors.