Base rate held again at 3.75% – here's what it means for you and when it might change

The base rate is used by the central bank to charge other banks and lenders when they borrow money – so it influences what borrowers pay and what savers earn.

It's also used by the Bank of England as a tool to control inflation (the rate at which prices rise). The Bank has a target – set by the Government – of 2% for the Consumer Prices Index (CPI) measure of inflation. The latest figures show that CPI inflation was 2.8% in the 12 months to May 2026 – above the Bank's target.

Why the base rate was held

On Thursday 18 June, the Bank's Monetary Policy Committee (MPC), which determines the rate, voted seven to two to hold the base rate. Two members voted to increase the rate by 0.25 percentage points, to 4%.

The MPC said: "Global energy prices have fallen since the previous meeting in response to events in the Middle East. But they remain higher than pre-conflict and have continued to be volatile. The impact of the energy shock on the UK economy remains uncertain."

Sarah Coles, head of personal finance with AJ Bell, said: "It hasn't come as much of a surprise that the Bank of England has decided to sit tight again this month. With inflation holding steady in May, a peace deal signed [to end the Middle East conflict] and the price of oil retreating, inflation expectations have been falling and taking rate forecasts with them."

Experts say the future outlook for the base rate is uncertain

Nicholas Mendes, of mortgage broker John Charcol, said: "Inflation at 2.8% is still well above the 2% target, the Energy Price Cap is set to push energy bills higher in the coming months and the Bank will want to see clear evidence that the recent improvement is durable before doing anything more.

"Inflation does not have to be back at target for a cut to happen, but the Bank will want to be confident that higher energy costs have not pushed up prices more widely before it moves."

Ms Coles continued: "At this stage, the market is only expecting a single rate rise at the very most by the end of the year. However, this can't be guaranteed. The Middle East peace deal doesn't include any agreement over nuclear material, and with so much ground to cover, peace remains fragile. A resumption of hostilities could send oil prices sky high again – putting pressure on prices and rates."

A hold doesn't mean mortgage rates will fall, brokers say

Mr Mendes continued: "For mortgage borrowers, a hold does not automatically mean rates tumble from here. The softer inflation figure and the ceasefire should help swap rates [which, oversimplifying greatly, are based on the market's view of long-term interest rates] stay calmer, and that does open the door to further gentle reductions.

"There has even been talk of a mortgage price war as lenders compete for the large number of borrowers due to remortgage over the next year. I would treat that with some caution. The recent cuts have tended to be small and frequent rather than dramatic, and that is the more realistic shape of things to come."

Aaron Strutt, of mortgage broker Trinity Financial, added: "Borrowers coming off fixed rates should not wait for big falls that may not arrive. It is sensible to review options early, secure a rate in advance and keep checking whether cheaper deals become available before completion. Tracker mortgages without early repayment charges may suit some borrowers, but fixed rates remain attractive for those wanting certainty."

On your lender's SVR? You can likely save £1,000s with a new deal

A standard variable rate (SVR) is the rate you pay once your current mortgage deal comes to an end. SVRs have a variable rate of interest, which means the rate can change at any time.

SVRs are normally far more expensive than the best fixed or tracker deals – right now, a typical SVR is currently around 5.34% to 6.9%, but the top two- and five-year fixes start from circa 4.47% and 4.43% respectively. So if you're on an SVR, you should consider switching to a new deal now – see our Cheap mortgage finding guide.

Savings rates remain strong for now – check what you're earning

Since the base rate was last held at 3.75% in April, the top savings rates available on easy-access accounts have stayed about the same – you can still easily get 4% or more. So it's crucial to check your interest now. Millions are on pants rates, and can easily and simply move their money to where it pays more. If you're on a fix, diarise to act before it ends.

It's best to go quick, as the best deals may not last – Ms Coles said: "The best easy-access deals without restrictions or short-term bonuses [have started] to retreat. We may see more of the same in the coming months."

Currently, the benchmark easy-access rate is from Chase, which pays newbies 4.5% – though it's possible to get up to 5% elsewhere.

If you're worried about rates dropping and can lock money away, you might want to consider a fixed deal, Afin Bank pays the top overall rate of 4.9% for five years, also matched by West Brom Building Society for 18 months. Or, if you want a shorter fix and prefer to save with a big name, MBNA (part of Lloyds) pays 4.85% for one year.

For full info and lots more options, see our Top savings accounts guide.