Market Movements
Bank of England Holds Base Rate at 3.75%: What the Unanimous Vote Means for Your Mortgage
The MPC voted unanimously to hold at 3.75%, citing Middle East energy price shocks and inflation now expected to hit 3–3.5%. Rate cuts are postponed but not abandoned — here is what it means for mortgage borrowers.
Unanimous Hold — No Dissent
At its meeting ending 18 March 2026, the Monetary Policy Committee voted 9-0 to maintain Bank Rate at 3.75%. This was the first unanimous hold in several meetings — previously, at least one member had voted for a cut — signalling that even the most dovish voices on the committee acknowledge the inflationary risks from the Middle East crisis.
The Bank's statement was notably hawkish in tone. It acknowledged that domestic conditions had been improving, but said the conflict-driven surge in energy and commodity prices represented a "significant new shock to the economy" that would push CPI inflation higher in the near term.
Inflation Forecast Revised Upwards
The key data point for mortgage borrowers: the Bank now expects CPI to rise to between 3% and 3.5% over the next couple of quarters, up from the 2.5–2.8% range it had previously forecast. This is driven primarily by:
- Higher energy prices — Brent crude above $95/bbl feeding through to household fuel bills and business costs
- Supply chain disruption — shipping route changes around the Strait of Hormuz adding cost and delay
- Second-round effects — businesses passing higher input costs to consumers
What This Means for Fixed Mortgage Rates
The hold was widely expected by markets, so the immediate impact on swap rates was modest. Two-year swaps remain around 4.1%, meaning fixed mortgage rates are unlikely to fall back any time soon. The lenders who repriced upwards over the past fortnight — Nationwide (up 0.35%), NatWest (up 0.35%), and Barclays (up 0.15%) — are unlikely to reverse course while the inflation outlook remains uncertain.
Current best buy fixed rates at 75% LTV:
| Product | Best Rate | Lender | Change vs Feb |
|---|---|---|---|
| 2-Year Fix (Purchase) | 4.32% | NatWest | +0.35% |
| 5-Year Fix (Purchase) | 4.52% | NatWest | +0.30% |
| 2-Year Fix (Remortgage) | 4.32% | NatWest | +0.35% |
Tracker Rates Hold Steady
For tracker mortgage holders, today's decision is neutral — no change to the base rate means no change to monthly payments. New tracker deals remain competitive: Barclays is offering base + 0.55% (currently 4.30%) at 75% LTV, meaningfully cheaper than equivalent fixed deals.
However, the risk profile of trackers has shifted. Before this crisis, the consensus was that rates would fall through 2026. Now, two-year swap rates are pricing in the possibility of rates staying at 3.75% or even moving higher if inflation proves persistent.
When Might Cuts Resume?
The Bank explicitly said it has not abandoned the easing cycle — but the bar for cutting has risen. Most economists now expect the earliest possible cut to be June 2026, contingent on the Middle East situation stabilising and energy prices retreating.
For mortgage borrowers, this means the current pricing environment — 2-year fixes around 4.3–4.7%, 5-year fixes around 4.5–4.8% — is likely to persist for at least the next quarter.