Bank of England keeps interest rates at 4.75%, what it means for mortgage holders

While the decision provides stability amid economic uncertainty, it means no immediate relief for mortgage holders, though savers may benefit in the short term.

Matt Smith, a mortgage expert at Rightmove, acknowledged the disappointment for borrowers: “While not the early Christmas present that many would have wanted, it was widely anticipated, and must be considered against a backdrop of inflation being at the top end of forecasts, and wages have increased at a higher rate than expected.”

He added that mortgage rates are unlikely to decrease in the coming weeks but could improve as 2025 progresses: “As the busier home buying season starts, lenders are likely to look at ways to take advantage of increased demand.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The trend in new mortgage pricing is downwards, but mortgage rates are likely to continue to yo-yo over the next three months. It is only when we start getting regular base rate cuts that the market will react favourably and swap rates will fall.”

Harris advised borrowers planning to remortgage to start early: “Speak to a broker ideally six to seven months before your current deal ends.”

Paul Broadhead, head of mortgage and housing policy at the Building Societies Association (BSA), urged borrowers in financial difficulty to act quickly: “Anyone who is concerned that they may experience financial difficulties in the coming months should contact their lender as soon as possible, preferably before missing any payments. Lenders have a range of practical, tailored support available to anyone who may be struggling.”

However, savers and investors may find some solace in the Bank’s decision. Holly Tomlinson, a financial planner at wealth manager Quilter, noted:“The continued high rates are a win for savers, with attractive returns still available on savings accounts and cash Isas. However, with rate cuts likely next year, locking in a fixed-rate account now could protect your money from the impact of falling interest rates.”

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, warned savers to prepare for potential changes:“It will be interesting to see how hard savers are hit next year, as several base rate cuts are anticipated if inflation is kept under control. Some savers may breach their personal savings allowance (PSA) and flock to cash Isas to protect their savings interest from tax.”

The Bank’s decision comes amid persistent inflation, with the Consumer Prices Index (CPI) rising to 2.6% last month, the highest level since March. Laith Khalaf, head of investment analysis at AJ Bell, explained the broader economic implications: “Combined with higher taxes and rising prices, that spells a more constrained consumer, which puts additional downward pressure on economic growth and corporate profitability.”