Bank of England holds base rate at 4.75% – what it means for your mortgage and savings

The base rate is used by the central bank to charge other banks and lenders when they borrow money – and so it influences what borrowers pay and what savers earn. It's also used by the Bank as a tool to control inflation (the rate at which prices rise).

Why the base rate was held

The Monetary Policy Committee (MPC) voted by a majority of six to three to hold the base rate at 4.75%. Three members voted to cut the rate to 4.5%.

The latest figures show that the Consumer Prices Index (CPI) measure of inflation rose to 2.6% in November 2024, above the Bank's 2% target. Due to this and other economic factors, such as stronger than expected growth in private sector wages, the Bank has decided not to cut the rate.

Nicholas Mendes, of mortgage broker John Charcol, commented: "The Bank of England's decision to hold the base rate at 4.75% comes as no surprise. While October’s Budget has provided a short-term boost to the economy, it has also introduced new pressures that are likely to keep inflation elevated for longer than previously anticipated."

Analysts still think the base rate will fall next year

Holly Tomlinson, a financial planner at investment firm Quilter, said: "Looking ahead to 2025, at least two small rate cuts of 0.25% are expected."

Meanwhile, Thomas Pugh, an economist at consultancy firm RSM, added: "We expect four cuts in 2025, meaning rates will finish the year at around 3.75%, but the risks are weighted towards fewer rate cuts."

However, Ben Thompson, of broker Mortgage Advice Bureau, cautioned: "Currently it feels as though rates may not come down as much as that, and for them to do so, either inflation needs to tick down again and/or economic growth needs to remain flat to negative."

As to when we'll start seeing any cuts, it's too early to say, though Mr Mendes said he expected changes to be "incremental rather than swift".

Bank of England governor Andrew Bailey said: "We think a gradual approach to future interest rate cuts remains right, but with the heightened uncertainty in the economy we can’t commit to when or by how much we will cut rates in the coming year."

Brokers say mortgage deals are unlikely to improve much in the short-term

The Bank's decision to hold the base rate was widely expected, so is unlikely to lead to any significant change in fixed-rate mortgage deals for the time being.

Justin Moy, managing director at broker EHF Mortgages, said: "It's unlikely we will see any wholesale mortgage rate cuts early in 2025, it's more about competitive pressures within the high street and the clamber to start the year well as lenders."

Aaron Strutt, of Trinity Financial, agreed: "Banks and building societies will want to have a busy start to the New Year which means offering the most competitively priced rates to attract borrowers away from their competitors."

However, Mr Thompson warned: "Swap rates [which lenders pay to get funding for fixed-rate mortgages] have been rising over the last week as markets expected disappointing wage growth and inflation news. Markets have therefore reacted ahead of the base rate decision."

So should you fix your mortgage now or wait?

Mr Strutt said: "Borrowers should try to lock into a deal now if they can, particularly if they are staying with their existing lender and need to remortgage". He added: "The trick is to monitor [your] lender's website and switch deals if and when they come down."

Mr Thompson said: "There is currently no saying whether rates will plummet, so if in any doubt, fix."

Of course, this is only general information – for bespoke advice tailored to your circumstances, speak with a mortgage broker. Plus, see our Getting ready to remortgage guide.

On your lender's SVR? You can likely save £1,000s with a new deal

A standard variable rate (SVR) is the rate you pay once your current mortgage deal comes to an end. SVRs have a variable rate of interest, which means the rate can change at any time.

SVRs are normally far more expensive than the best fixed or tracker deals – right now, a typical SVR is around 7% to 8%, while the top fixed rates are closer to 4%. So if you're on an SVR, you should consider switching to a new deal now – see our Cheap mortgage finding guide.

Savings rates are expected to remain stable for now

Since the base rate was last cut in November, many of the top savings rates have stayed more or less the same – but the top easy-access rates, including cash ISAs, have dropped slightly. Ms Tomlinson said the decision to hold the base rate "offers stability" for savers – at least for now.

However, it's still crucial to check your interest. Millions are on pants rates, and can easily and simply move their money to where it pays more. And if you're on a fix, diarise to act before it ends.

Currently, the top easy-access cash ISAs beat normal savings – Moneybox pays 5%, while Plum pays 4.93%. Both are app-only. If you've used up your ISA allowance for this year, you should still be getting the top standard easy-access rate, which is 4.85% from app-only Atom Bank.

For lots more options, including 5% interest for newbies to Chase, see our Top savings accounts guide.