Bank Base Rate stays at 3.75% after the Bank of England’s July decision, with the Monetary Policy Committee voting 6–3 to hold. Inflation is now 2.6%, but it remains above the Bank’s 2% target.

“CPI inflation has fallen to 2.6% since the previous meeting, although it is expected to rise later this year as the effects of higher energy prices continue to pass through.”

The Bank thinks inflation will rise again before it falls back. In its July report, it projects CPI at 3.2% in late 2026.

Housing

The Bank says mortgage rates have fallen since April, but recent increases in market reference rates are now feeding through to quoted mortgage rates. It also said housing market activity has been weak, with mortgage approvals for house purchase down nearly 15% in May and broadly flat in June.

Its regional Agents paint a similar picture. Buyer and seller confidence is still fragile. Transactions are taking longer. House prices are flat in many areas and falling in others.

“There are fewer enquiries from first time buyers in the mortgage market, although remortgaging volumes are holding steady.”

Mortgages

Three MPC members wanted to raise the Bank Rate to 4%. That tells borrowers the Bank is still worried about inflation, especially if higher energy prices start feeding into wages and wider prices.

That is why many lenders may stay cautious, even without a rate rise today.

Borrowers wondering what to do for the best may be better to lock in a rate now to avoid more increases.

Renting and inflation

For renters, the wider squeeze remains. The Bank’s Agents said many households have limited disposable income and savings. That keeps affordability under strain, even without a rate rise today.

The bigger issue now is inflation. The Bank says higher energy prices are still the main risk. If that keeps pushing prices up, mortgage costs could stay higher for longer. If inflation cools again, fixed rates may ease.

Sources

• https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2026/july-2026
• https://www.bankofengland.co.uk/monetary-policy-report/2026/july-2026
• https://www.bankofengland.co.uk/agents-summary/2026/july-2026
• https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
• https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/june2026
• https://www.mpamag.com/uk/news/general/live-blog-bank-of-england-to-reveal-latest-rate-decision/584331