Content Writer
Director
As we move through the final week before the September base rate announcement, many brokers are urging clients to complete their application, or remortgage sooner rather than later. This will come as no surprise to many in the industry, given that a 0.75 rise in the average residential mortgage rate has already been seen so far this year. This is regardless of the held base rate, and has led to an overwhelming consensus that we won’t see a base rate reduction at the BoE meeting on 17th.
While the base rate has been static since last December, at 3.75%, gilt yields have shot up to 5.8168%, the highest since 1998. This has directly impacted swap rates for lenders, which means that borrowers have already felt the impact of heightened costs in the fixed-rate deals currently available.
Rise or hold?
While there is almost certainty in the agreement that current economic conditions won’t result in a September fall in the base rate, economists are struggling to agree on whether the BoE will choose to further maintain the 3.75% bank rate, or opt for a 0.25% rise at next week’s meeting.
However, whether or not there is movement in September, most are in agreement that an increase in the current base rate should be expected by the end of 2026, and in the coming year.
I asked four of our top brokers their thoughts on the upcoming BoE base rate announcement, here’s what they had to say:
Neil Mulhearn - Head of Sales for Echo Finance
"My personal view is that it's 50:50 if we see a rate this time, but it is very likely to increase before Christmas. Inflation is still above target, oil has gone back to $100 a barrel, and we already know of an increase to the domestic fuel cap in October. This inflationary pressure will force the Banks' hand on rates, but they may still take a wait and see approach this month.”
"Although next week's vote is exceptionally close to call, my hunch is that we will see a hold in September. With the October budget just around the corner and complex inflationary pressures linked to US trade policy, it makes practical sense for the Bank to wait another month to evaluate what fiscal policies the chancellor introduces to balance growth and inflation. Even though swap rate spikes are forcing lenders to reprice products upward, holding the base rate gives the committee essential breathing room to assess incoming fiscal data before making a move."
Jane Colby
"The assumption earlier this year was that the Bank of England was done with rate increases, but volatility across global markets has firmly put a hike back on the agenda. Between geopolitical shifts, US Treasury signals, and the sharp pressure on gilt yields, the MPC is facing compounding headwinds. The pressure is rapidly building on policymakers to nudge the base rate up before 2026 is through, and taking action now allows the Bank to respond directly to these external pressures, rather than falling behind the curve."
John Tarazi
"Keeping the base rate held at its current level is about as positive an outcome as borrowers could hope for right now. While fixed-rate mortgage pricing has been twitching up and down due to swap rate volatility, keeping the base rate held provides a much-needed anchor of stability. Holding gives both advisers and borrowers time to navigate this fragile market without introducing the immediate shock of another rate increase."
Lee Trett What brokers can do
At this point in time, mortgage brokers who have been active in the industry for five years or more, already know how to navigate a volatile market. Although base rate changes may have been somewhat easier to predict in the past, there have been some surprises in recent years that keep brokers continually on their toes.
The most reasonable response to the current political climate is to keep on keeping on. Don’t make dangerous assumptions that base rates will fall, or that lenders will reduce rates in the near future, and certainly don’t provide any false hope to borrowers.
Particularly those clients remortgaging off of longer term deals are still used to a fairly stable mortgage rate environment, and are therefore dragging their feet with choosing a new deal, in hope of a return to the elusive ‘normal’.
It’s important to educate borrowers that rates are unlikely to fall any time soon, and that volatility in the market is likely to stick around. While sudden swings in the political environment can, and have, happened in the past, it’s best to operate cautiously for the time being.
Keeping up with the latest UK mortgage news, as well as the wider economic climate, is the best way to ensure your advice is timely and accurate.