The Bank of England has opted to keep interest rates steady at 3.75% after its latest monetary policy committee meeting, signaling a pause on any immediate policy changes.
Officials are balancing persistent inflationary pressures against an improving economic outlook due to rising geopolitical risks. Rising tensions in the Middle East, including the ongoing conflict in Iran, have destabilized markets and driven up oil prices, adding to the uncertainty.
The inflation rate remains at 3.3%, above the 2% target, but policymakers reached a unanimous decision to adopt a cautious, wait-and-see approach while assessing the likely duration and impact of the situation.
However, despite holding interest rates steady today, the Bank of England signaled that borrowing costs are likely to rise in what it described as “force majeure”.
Industry response:
Emily Willams, research director at Savills: “Many will be breathing a sigh of relief that there has been a strong consensus from the MPC today to keep rates on hold, despite rising inflationary pressures.
“The transaction figures released today point to a degree of resilience in the housing market. Most of these deals are likely to have been agreed before the conflict in the Middle East escalated, but it highlights an underlying stream of demand that could re-emerge if the situation improves. While many lenders have cut rates in recent days to remain competitive, buyers are expected to sit on their hands until there is more clarity.
“The path to lowering interest rates now looks increasingly uncertain, pointing to a housing market that will remain highly price-sensitive. The real impact on activity is likely to become apparent in the coming months, as mortgage offers are agreed before the conflict ends and buyers reassess affordability.”
Kevin Shaw, National Sales Managing Director, LRG: “Today’s decision to keep interest rates on hold is the news that many buyers, sellers and agents were expecting. It does not remove uncertainty from the market, but it does remove the immediate threat.
“The Bank had to take a difficult decision against an unusually volatile background. The ceasefire in Iran is changing by the day and the interest rate outlook has changed in a remarkably short period: only two months ago we expected to cut interest rates twice; since the war in the Middle East began, two increases during the year appeared a possible scenario.
“Importantly, the situation looks less fragile than it did a month ago. Assuming the situation in the Middle East does not escalate, today’s hold suggests less concern about the path of rates for the remainder of the year. Fears of further increases that were being discussed in early March now look less certain.”
“From LRG’s perspective, the property market remains resilient. Buyer activity and sales remained good throughout April, instructions are 5% higher and despite widespread uncertainty we are seeing momentum. Today’s decision will help maintain that confidence.”
Nathan Emerson, CEO of PropertyMark: “Considering the current tensions around the world, it is reassuring to see base rates kept stable. For those on the property ladder or thinking about the buying and selling process, today’s news brings a sense of relief over the coming months.
“While being realistic in sentiment, we currently sit in the midst of a sensitive situation where many households have still not fully recovered from cost of living issues. While it may indeed feel that pressures are still on in relation to affordability, it is hoped that as tensions ease globally, we will move forward with greater confidence which provides much stronger levels of home affordability for consumers throughout the long-term journey of purchasing a property.”
Amy Reynolds, Head of Sales at Antony Roberts: “While a pause from the Bank of England was expected, as always the tone in the minutes and further guidance is as important.
“As far as the housing market is concerned, the underlying need to move forward remains strong and there remains demand for well-priced, high-quality homes. In terms of pricing, the closer the asking price is to the actual market value, the greater the chances of achieving a successful sale.
“Buyers are not stretching themselves to make offers they don’t believe will be accepted – especially in this rate environment – they are simply selecting alternative properties. While the macroeconomic backdrop may slow the pace of house price growth, we are seeing a more price-sensitive market where realism and accurate positioning is key.”
Jeremy Leaf, North London estate agent: “While it is likely that interest rates will rise again before falling back down, today’s pause is indicative of the inflationary pressures that are building due to the impact of the war in the Middle East. Certainly the Bank did not want to do anything that would compromise the little growth we have seen in the economy recently, which would clearly prove self-defeating.
“As far as the impact on the property market is concerned, the impact is likely to be quite minor, although encouragingly we have seen some mortgage costs begin to decline again. This will certainly help to improve confidence which remains at a relatively low low.”
Verona Frankish, CEO of Yopa: “The property market has not stopped, it has simply found a more sustainable rhythm and today’s decision to keep the base rate in place will only help to further this measured level of momentum.
“As the year progresses, we expect this steady level of activity to continue, with the prospect of a rate cut later in the year likely to provide a further boost to market confidence.”
Nigel Bishop of Recoco Property Search: “With inflation rising and ongoing political uncertainty, a rate cut was highly unlikely. Some mortgage-reliant buyers may decide to put their search on hold for a while, while others; particularly cash buyers; will seize the opportunity in a less competitive property market.”
Chris Hodgkinson, managing director of the House Buyer’s Bureau: “Another freeze on interest rates is unlikely to do much to lift property market sentiment.
“The market is already moving very cautiously against a backdrop of economic and geopolitical instability and, while today’s decision provides a degree of certainty, it also increases the current feeling of inertia.
“Buyers and sellers are waiting for a clear signal that borrowing costs are coming down and without that, many will be sitting tight. As a result, this ongoing pause risks creating further uncertainty in a market that is already lacking confidence and it certainly won’t be enough to restart activity.”
Adam Jennings, Head of Residential at Chestertons: “The decision to keep rates on hold should help stabilize buyer confidence at a time when some have adopted a more cautious, ‘wait and see’ approach. We saw a decline in inquiries in March as geopolitical uncertainty weighed on sentiment, but importantly, this has not displaced underlying demand.
“Buyers who are already in the market continue to make progress, and new offers have improved significantly since the beginning of the year. With affordability gradually improving and supply remaining tight, we expect activity to remain resilient as we move into the spring market.”
Nicholas Mendes, Mortgage Technical Manager, John Charcoal: “The hold should not be taken as a sign that the Bank is relaxed about the outlook. It is still a difficult backdrop, with inflation pressures rising again while growth remains weak and the labor market showing signs of softening.”
“For mortgage borrowers, the pause does not automatically mean mortgage rates are going to fall. Fixed mortgage pricing is driven more by swap rates and lender funding expectations than the bank rate alone. If the market still believes rates may need to move higher at the end of the year, lenders are likely to remain cautious.
“We may still see selective reductions where individual lenders seek to compete, or where funding costs ease for a period, but borrowers should be careful not to read this as a continued downward trend.”
Guy Gittins, CEO of Foxtons: “Following a 3.3% rise in inflation this month, control over the base rate provides a welcome degree of stability for the property market. It also gives buyers greater certainty about the cost of borrowing when making long-term financial decisions.
“The market is not moving at the same pace as 2025 because of the growth we saw in the first quarter after the stamp duty holiday ended last year. When compared to 2024, we are seeing a stable and improving outlook, with flexible buyer interest and an increased number of viewings at Foxton in April compared to March 2026.”