The Bank of England has held the base rate at 4.5 per cent for March 2025, with eight out of nine members of the Monetary Policy Committee voting to maintain current levels, but what does it mean for your mortgage and savings?
This decision follows two previous cuts since August 2024, when interest rates in the UK began to fall from their peak of 5.25 per cent.
The base rate influences what banks and lenders charge customers for borrowing money, such as mortgages and loans, as well as returns on savings.
Andrew Bailey, the governor of the Bank of England, said: "There's a lot of economic uncertainty at the moment we still think that interest rates are on a gradually declining path, but we've held them at 4.5 per cent today."
How will the Bank of England's base rate decision impact your mortgage and savings?
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How will the Bank of England's base rate decision impact mortgages?
The 1.2 million people on tracker mortgages will see no immediate change to their monthly payments, as these move directly in line with the base rate.
Similarly, those on standard variable rate (SVR) mortgages, which roughly follow base rate movements, will likely maintain current payment levels.
Fixed-rate mortgage holders will not see any change in their existing payments. However, around 1.8 million fixed-rate mortgages are set to expire in 2025, with many homeowners facing significantly higher rates when they remortgage.
Those coming off older, lower fixed rates may experience a particular payment shock. Jenny Ross, the editor of Which? Money, expressed concern about the impact on homeowners.
Interest rates on savings have been rising in the last couple of years amid multiple rate hikesGETTYShe said: "The decision to hold interest rates again will be a disappointment to both prospective buyers.
"Those remortgaging, with homeowners coming to the end of their fixed rate terms likely to face considerably higher monthly repayments than they're used to."
Ross advised those struggling with their interest rate-hiked mortgage payments to contact their lender.
"Anyone worried about managing their payments should speak to their mortgage lender, which is obliged to help.
"Lenders may be able to suggest alternative payment options, such as a temporary payment holiday or only paying the interest on repayments."
How will the Bank of England base rate decision impact savings?
Despite the rate hold, savers can still find deals that beat the current three per cent inflation rate. Cash ISAs currently offer better returns than easy-access accounts, with Trading 212 providing the top rate of 5.25 per cent.
Monument Bank leads easy-access accounts at 4.75 per cent, though with a limit of three withdrawals annually. Oxbury Bank offers 4.8 per cent on its 90-day notice account.
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Homeowners have been saddled with rising mortgage repayments GETTYRegular savings accounts provide the highest rates, with Principality Building Society paying 7.5 per cent fixed for six months, though monthly deposits are capped at £200.
John Dentry, Product Owner of the Current Account Switch Service at Pay.UK, encouraged consumers to remain proactive despite stable rates.
He said: "While the decision to hold the base rate at 4.5 per cent means interest rates on current and savings accounts are unlikely to shift in the short term, it doesn't mean consumers should stand still."
Dentry noted that banks continue to compete through various incentives. "With over a million current account switches recorded in 2024, many consumers are actively seeking better deals," he added.
"While future rate cuts may be on the horizon, there's no reason for consumers to wait to review their banking options."
