- Bank holds rates at 3.75% − it hasn’t moved since December
- The market is pricing in two rate cuts in 2026, with the first in June or July
- It’s also considering an outside chance of a third before the end of the year
- What it means for your money
Sarah Coles, head of personal finance at AJ Bell, comments:
“The Bank of England has decided to sit tight while it waits to find out which piece of bad news is going to be worse in the coming weeks: higher inflation or miserable growth. But no news isn’t necessarily good news for our pockets.
“It’s likely that prices will rise more quickly. Heavy discounting seems to have put off some of the worst of it for now, but there’s only so long that retailers can take higher costs on the chin before passing them on. It means it pays to go back to your budget. If you haven’t had time to put one together, you can spend some quality time with your bank app or statements. Take a look at what you’re spending and where, and whether there are any nice-to-haves you can pencil in to cut when times get tougher.
Mortgages
“The Bank choosing to hold rates means we’re unlikely to see major movements in variable rate mortgages. For fixed rates, things are a bit more complicated.
“Fixed rate mortgages have come down slightly again this week. Fears of higher interest rates at the outbreak of war two months ago ramped rates up, but more recently those fears have eased slightly. It means we’ve seen mortgage rates rise and then fall back.
“However, that doesn’t mean mortgage rates are still on their way down. In fact, disappointment with the lack of progress with peace talks, plus higher oil prices, mean swap rates are up, which could mean mortgage rates rise again. With so much uncertainty over what happens next in the Middle East, this isn’t guaranteed either, so it’s worth hedging your bets.
“If you have a remortgage due in the next six months, check if you can agree a deal for your remortgage now. If rates fall from here, you can shop around elsewhere, but if they rise, you’ll have locked in a competitive rate.
“A fixed rate may be more attractive to remortgagers in such an uncertain environment. However, given how these rates have risen, some people may opt for a shorter fix, in the hope the immediate crisis has passed by the time they come to remortgage again.
Savings
“Easy access savings tend to react to the Bank of England, so there’s unlikely to be much change. But fixed rate deals could still be on the move.
“Savings rates are highly dependent on rate expectations and swap rates. If they continue to rise, we could see rates nudge upwards. However, there are no guarantees they will keep climbing, because so much depends on what happens in the Middle East.
“With some decent rates around today, savers need to ask themselves what they’re gaining if they wait and see. Rates could rise, so they get a slightly better deal, but this could take longer than you expect, so you could spend longer in an unrewarding account while you wait. There’s also the chance that rates don’t rise, in which case you would be counting the cost.
“For existing savers, now’s a sensible time to shop around for a better deal. Assuming higher inflation is on the way, if you’re in an uncompetitive account, it may not hang onto its spending power, so check what you’re earning on your savings, and see what you could make elsewhere. It’s also worth thinking about investment for cash that you won’t need for 5-10 years or more. Over the short term it will rise and fall in value, but over the long term it stands a better chance of bearing inflation than savings.”
