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Base rate held: how will it impact mortgage and savings rates?
Bank of England maintains the rate at 3.75% in June
Sam covers personal finance topics, from the best savings rates to the reasons mortgage lenders say no. He enjoys crunching the numbers to help consumers get ahead.
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The Bank of England's nine-member Monetary Policy Committee (MPC) voted 7-2 in favour of holding the base rate. Two members voted to raise the rate to 4%.
But how will this decision affect falling mortgage rates, and did the MPC give any indication of what could happen to the base rate for the rest of 2026?
Read on to find out what the decision means for you – whether you're buying a home, remortgaging or trying to get the best return on your savings.
Why has the Bank of England held the base rate?
At the last MPC meeting in April, inflation figures were above 3%, and there was still significant uncertainty about the impact of conflict in the Middle East on the UK economy.
The MPC met in June under different circumstances. The latest inflation figures show it at 2.8%, below market expectations. In addition, a peace deal has been signed between the United States of America and Iran, which has helped to reduce the global cost of energy.
When deciding to maintain the base rate, the MPC also said that a weakening economy and higher interest rates facing business and consumers will reduce inflation over time.
However, the committee highlighted that global energy prices still 'remain higher than pre-conflict and have continued to be volatile', and 'the impact of the energy shock on the UK economy remains uncertain'.
What does the decision mean for borrowers?
Conflict in the Middle East has increased the cost of borrowing for consumers. On 1 March, the average two-year fixed rate was 4.83%, and the average five-year fix was 4.95%. On 18 June, those figures increased to 5.6% and 5.57%, respectively.
Today's decision, combined with other factors, means that borrowers could see slightly lower mortgage rates in the coming weeks.
Nicholas Mendes, of mortgage broker John Charcol, said the decision 'does not automatically mean rates tumble from here. Fixed pricing is driven by swap rates and lender funding expectations rather than bank rate alone, and those have already moved.
'The softer inflation and the ceasefire should help swaps stay calmer, and that does open the door to further gentle reductions.'
David Hollingworth, of mortgage broker L&C, agrees that the outlook for mortgage borrowers has improved in recent weeks.
With rates expected to drift down, rather than a significant repricing of fixed-rate mortgages, tracker mortgages will continue to offer the lower rates for consumers. Only tracker mortgages currently offer rates of less than 4%.
However, borrowers need to be comfortable with the possibility that their rate could increase before choosing a tracker.
Hollingworth advises: 'Trackers are therefore better suited to those with some flex in their disposable income. Trackers are more widely available without any early repayment charges, though, so they do at least allow an exit route if rates take another turn and climb steeply.'
The table shows the best tracker rates for those remortgaging.
| 60% | Halifax | 72% | 3.96% | £1,499 | 7.24% |
| 60% fee free | Principality Building Society | 80% | 4.5% | £0 | 6.25% |
| 70% | Yorkshire Building Society | 74% | 4.06% | £995 | 5.99% |
| 70% fee free | Principality Building Society | 80% | 4.55% | £0 | 6.25% |
| 80% | Halifax | 72% | 4.13% | £1,499 | 7.24% |
| 80% fee free | Principality Building Society | 80% | 4.65% | £0 | 6.25% |
- Find out more: best mortgage rates and deals 2026
What will happen to the base rate in 2026?
At the height of the conflict in the Middle East, some predictions pointed to three base rate increases. These have been revised down, as tensions have cooled in the region.
Experts are now generally forecasting a level base rate for 2026. For example, Barclays Research and Lloyds Bank both expect no further increases to the base rate this year.
What does this mean for savers?
One impact of the recent market turmoil is that returns from fixed-rate savings accounts are increasing. Since March, the average rate of a one-year fixed-rate savings account has risen every month.
If you have a variable-rate savings account, today’s decision means your rate will remain unchanged.
Here are the top accounts available right now.
- Find out more: best savings rates 2026
| Instant access | Cahoot | 5%(a) | £1 | Internet | Monthly, yearly |
| One-year fixed rate | MBNA | 4.85% | £1,000 | Internet | On maturity |
| Two-year fixed rate | West Brom Building Society | 4.90% | £1,000 | Branch, internet | Monthly, yearly |
| Three-year fixed rate | Afin Bank | 4.85% | £1,000 | Mobile app | Yearly |
| Four-year fixed rate | Thisbank | 4.82% | £100 | Internet, mobile app | Yearly |
| Five-year fixed rate | Afin Bank | 4.90% | £1,000 | Mobile app | Yearly |
Table notes: Rates sourced from Moneyfacts on 18 June 2026. Provider customer score is based on savers' overall satisfaction with the brand and how likely they are to recommend it to others. n/a means sample size was too small for us to generate a provider score. Deals marked 'Raisin exclusive' are available only through Raisin UK, a savings platform. (a) 5% AER on balances up to £3,000.
When is the next base rate decision?
The next MPC meeting is scheduled for Thursday 30 July.
The MPC will then have three further meetings this year in September, November and December.
This story is regularly updated after the latest base rate decision, with rate analysis and expert views. The last update was on 18 June 2026.
