What's happening to UK interest rates and mortgage deals?
The Bank of England has kept UK interest rates unchanged at 3.75% for a sixth consecutive time, maintaining them at the lowest level since February 2023.
Interest Rates Explained
An interest rate determines the cost of borrowing money or the reward for saving it. The Bank of England's base rate influences mortgage, credit card, and savings rates for millions of people.
When inflation is above the target of 2%, the Bank typically raises rates to encourage spending less and reduce price rises.
Recent Trends in UK Interest Rates and Inflation
The base rate reached 5.25% in 2023, remaining there until August 2024 when cuts began. Rates dropped to 4% before stabilizing at that level from September to November 2025.
A subsequent cut was made in December 2025, followed by steady rates in January, March, April, June, July, and September 2026. Meanwhile, UK inflation, measured by CPI, has fluctuated but is expected to rise further.
The US-Israel war with Iran has significantly impacted global energy and fuel costs, contributing to the overall increase in price rises.
Future Projections
Initially, the Bank was forecasting two rate cuts in 2026. However, the conflict's impact on energy prices and inflation have revised these expectations.