Base Rate held at 4%: but what could it mean for mortgages?

Key summary: 

• The Bank of England has held the Base Rate at 4% this month 

• Average two-year fixed mortgage rates are approximately 4.44%, and five-year fixed around 4.48%, based on today’s mortgage rate data 

• The market currently expects the next meeting, in mid-December, to be a 0.25% cut. But this could still change based on other economic factors, including how the markets react to the Autumn Budget, due at the end of this month 

The Bank of England has announced it will hold the Base Rate at 4% this month. This comes after a hold at the previous meeting, in September 2025.  

The Bank’s focus is to strike the right balance between keeping inflation close to its target of 2%, and keeping the wider economy healthy. 

Last month, it was announced that inflation remained unchanged, and has now held at 3.8% for the third month in a row. This is far from the highs we saw inflation reach back in 2022, when it was in excess of 10%. But this figure will no doubt be contributing to the Bank’s cautious approach – along with other economic factors – around when to lower the Base Rate, and by how much. 

The current view is that we might see a 0.25% Base Rate cut at the next Bank of England meeting in December. But this forecast could change depending on things like inflation, and the upcoming Autumn Budget.  

What’s happened to mortgage rates recently?

After a period of 2-year fixed rate deals being the more expensive option by a considerable margin – around 0.5% higher when the gap was at its peak back in 2023 – 2-year rates are now cheaper overall, with the average 5-year fixed rate currently 0.04% higher.

The average 5-year fixed rate is down from 6.08% in July 2023, to 4.48% this week, and the average 2-year fixed rate is down from 6.61%, to 4.44%. You can check the current average mortgage rates for different terms and deposit sizes here, which we update throughout the week.

What do the experts think?

Our mortgage expert, Matt Smith, says: “Ahead of one of the most widely anticipated and discussed Autumn Budgets of recent times, it was unlikely the Bank would go for another interest rate cut so close to the announcement and has opted for stability instead. There’s still a good chance of a rate cut before the end of the year, depending on what is announced in a couple of weeks’ time, and if not then we’re looking at early 2026. 

“Some good news is that the cost of financing mortgages has actually come down in recent weeks. We’ve started to see some lenders become more competitive in certain segments of the mortgage market in recent days, and offer some headline-grabbing cheaper rates, as they look to secure some final business before the end of the year. 

“The average two-year fixed mortgage rate is now 4.44% – down from 4.95% at this time last year. The downward trend is good, but mortgage rates have come down more slowly than many were predicting at this time last year. Rates have come down even more slowly for five-year products. With the uncertainty surrounding how the upcoming Budget will impact people’s finances, another rate cut soon followed by some notable reductions in mass-market mortgage rate products would be a big boost to home-mover sentiment and affordability.”  

What does the Base Rate hold mean for my current mortgage?

Changes to the Bank’s Base Rate can impact how much interest you’ll pay on loans, including mortgages. If you’re on a fixed-rate deal, your monthly payments won’t change until the end of your deal. And if you’re on a variable or tracker mortgage, this month’s Base Rate hold will mean your monthly payments remain the same.

If you’re coming to the end of your fixed-rate mortgage soon, you’ve probably already started to think about the rate you’ll be offered on your next deal. Our remortgage calculator will show you new estimated monthly repayments from your current lender, and the 10 largest UK lenders. You can also check the current average remortgage rates here.

A good way to find out how much you could borrow is to use a mortgage calculator. And to get a personalised result by applying for a Mortgage in Principle which will take you one step closer to a mortgage offer.

In July 2023, the Mortgage Charter was launched to help those struggling to meet their monthly payments, as well as borrowers who are coming to an end of their fixed rates soon.

The Mortgage Charter encourages lenders to be flexible and offer borrowers the chance to lock in a new deal up to six months before their current rate ends. Of course, borrowers can also look at moving to another lender – commonly known as remortgaging – but this can take longer, as you have to go through a normal lending process, such as income checks, the legal process, and maybe a valuation of your home.

This all takes time, and you would want to make sure you’re looking around a few months before the end of your current deal to avoid falling onto your lender’s Standard Variable Rate – which will cost more than the repayments you’d have made on a fixed rate mortgage. The current average for SVRs is 7.11%.

When could interest rates fall?

The Bank of England’s Monetary Policy Committee meets every six weeks to discuss and vote on whether interest rates should go up or down, or stay the same.

History has shown that after interest rates have increased over time, they have remained flat before starting to come down gradually. The Bank of England will be conscious not to make additional cuts too early, and the markets are predicting the Base Rate might be reduced next month, at the final meeting of 2025. Though as always, this could change depending on what happens in the broader economic environment. 

The next decision on interest rates will be announced at 12pm on Thursday 18 December 2025. 

The header image for this article was provided courtesy of Boardwalk Property Co, Bristol

Please note: Your home may be repossessed if you do not keep up repayments on the mortgage. Rightmove is not authorised to give financial advice; the information and opinions provided in these articles are not intended to be financial advice and should not be relied upon when making financial decisions. Please seek advice from a regulated mortgage adviser.