19 June 2025 | UK Mortgage Blog

Bank of England Holds Base Rate at 4.25% as MPC Votes 6-3 to Pause

On 19 June 2025, the Bank of England's Monetary Policy Committee (MPC) voted 6-3 to hold the base rate at 4.25%. This was the first interest rate decision since the committee cut rates from 4.5% to 4.25% in May, and it signals that the Bank is taking a measured and cautious approach to further monetary easing. Three members of the nine-strong committee voted in favour of an additional cut, but the majority opted to keep rates on hold.

The decision comes against a backdrop of persistent inflationary pressures. While the UK economy has shown some signs of stabilisation following the May rate reduction, inflation has remained above the Bank's 2% target. The MPC indicated that it wanted to see more concrete evidence that underlying price pressures were easing before committing to further cuts. In particular, the committee cited concerns around services inflation and wage growth, both of which have proved sticky in recent months.

Why the MPC Chose to Hold

The six members who voted to hold argued that the May cut had been the right move but that it was too soon to assess its full impact on the economy. They pointed to several factors that justified patience: headline CPI inflation remained above target, the labour market was still relatively tight, and global trade conditions continued to create uncertainty around the economic outlook. The committee acknowledged that the direction of travel was likely towards lower rates over time, but stressed that the pace of cuts would depend on incoming data.

The three dissenting members took a different view, arguing that the economic slowdown was sufficient to warrant another quarter-point reduction. They highlighted weakening consumer confidence, slowing retail sales, and the drag on growth from elevated borrowing costs. However, they were outnumbered by colleagues who preferred to wait for the next round of inflation and employment data before acting.

What This Means for Mortgage Holders

For borrowers, the hold decision means different things depending on the type of mortgage they hold. Here is a breakdown of how the decision affects each category:

Tracker Mortgages: Borrowers on tracker deals saw no further reduction to their monthly payments following this decision. Those who benefited from the May cut will continue to pay at the lower rate, but will not see any additional relief until the Bank makes its next move.
Variable Rate Mortgages: Homeowners on standard variable rates (SVRs) are similarly unaffected by this hold. SVRs are set by individual lenders and tend to follow the base rate with a delay, so the May cut may still be filtering through for some borrowers.
Fixed Rate Mortgages: Those on fixed-rate deals are insulated from short-term base rate movements. However, borrowers approaching the end of their fixed term should be aware that current remortgaging options reflect the market's expectation of gradual, not rapid, rate cuts ahead.

Fixed Rates Remained Largely Unchanged

In the weeks surrounding the June decision, fixed mortgage rates remained broadly stable. Many lenders had already adjusted their pricing following the May base rate cut, and the widely anticipated hold in June gave them little reason to move again. Two-year and five-year fixed rates continued to hover around levels seen in late May, with the best deals available to borrowers with larger deposits and strong credit histories.

For those hoping that a rapid succession of rate cuts would drive fixed rates significantly lower, the June hold serves as a reality check. Swap rates, which underpin fixed mortgage pricing, had already priced in a cautious path for the Bank of England, and the MPC's decision was in line with those expectations.

How Lenders Responded

Major UK lenders held steady on their mortgage pricing in the wake of the announcement. Most high street banks and building societies had already incorporated the May rate cut into their product ranges and saw no need to make further adjustments. Some lenders noted that competitive pressures in the mortgage market remained strong, but that margins were already tight and further reductions would need to be justified by lower funding costs.

A handful of smaller lenders and specialist providers continued to offer attractive deals in an effort to gain market share, particularly in the first-time buyer and buy-to-let segments. However, the overall message from the lending industry was one of stability rather than movement.

Looking Ahead

The next MPC decision is scheduled for August 2025, and markets will be watching closely for any shift in the committee's tone. If inflation data between now and then shows a meaningful decline, the door could open for another cut before the end of the summer. However, if price pressures remain stubborn, the Bank may choose to hold once more.

Borrowers who are waiting for cheaper mortgage deals may need to exercise patience. The Bank of England has made it clear that it will not rush into further cuts, and the path to lower rates is likely to be gradual. In the meantime, it is worth reviewing your mortgage options and speaking to a qualified advisor about the best strategy for your circumstances.