Bank of England Base Rate
Following the latest meeting on 20th June 2025, the Bank of England opted to hold the base rate at 4.25%. This decision follows the previous cut from 4.5% earlier in the year and signals a cautious optimism from the Monetary Policy Committee as inflation begins to edge closer to the target 2% mark.
Despite this, the MPC remains concerned about stubborn core inflation and global uncertainties, leading them to hold steady for now. You can view the official MPC summary here – Bank of England MPC Summary – June 2025
Mortgage Rates – A Game of Two Halves?
While the Bank Rate has held, mortgage rates have moved both up and down over the last few weeks, which may be confusing for borrowers.
In early June, Halifax increased their mortgage rates by up to 16bps, while Clydesdale Bank also increased selected product rates later in the month:
These upward moves followed a period of relative calm where, according to Moneyfacts, rates had held steady for two weeks in a row – Rates steady for second week in a row: Moneyfacts
However, the picture quickly changed again.
Mid-to-Late June – The Shift Begins
As inflation data came in showing UK inflation remained at 3.4% in May (still above target but not rising), market expectations of future rate cuts increased. Lenders responded by cutting fixed mortgage rates:
- Nationwide cuts rates for new and existing customers
- Accord and Foundation lower Buy-to-Let rates
- Virgin Money and Clydesdale cut stress testing rates
More recently, Barclays and TSB made headline cuts, with some fixed rates now starting from as low as 3.88%, depending on circumstances – Barclays cuts rates, TSB trims by up to 0.30%
What’s Going On?
It’s a case of changing sentiment. While the Bank Rate hasn’t moved, swap rates (used by lenders to price fixed-rate mortgages) have started to fall in anticipation of future cuts. This helps explain why some lenders are reducing fixed rates even when the base rate holds.
The shift in affordability criteria by Virgin Money and Clydesdale Bank is also notable. By reducing stress test rates, they may be making it easier for some borrowers to pass affordability checks – good news for those struggling to secure the borrowing they need.
Our Thoughts
The last few weeks have reminded us just how quickly things can change in the mortgage world. It’s great to see fixed rates starting with a 3 again and lenders becoming more flexible, especially around stress testing.
That said, we’re not out of the woods just yet. Inflation is still higher than the Bank of England would like, and that’s likely to keep things a bit bumpy in the short term.
If you’re thinking about moving or remortgaging in the next 6–12 months, now could be a good time to explore your options. Booking a deal now could protect you if rates go up—but still leave you the flexibility to switch if things improve.
Information correct at time of writing: June 2025
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