Bank of England Holds Rates at 3.75%: What It Means for London Borrowers
The Bank of England’s Monetary Policy Committee held Bank Rate at 3.75% on 17 September 2026, its sixth consecutive hold since the rate was cut to that level in December 2025. The vote was split 6–3, with three members — Catherine Mann, Megan Greene and Huw Pill — voting to raise rates by 0.25 percentage points to 4%.
Why the Bank held — and why some wanted a rise
CPI inflation rose to 3.1% in August, with much of the overshoot above the 2% target attributed to energy prices, particularly motor fuels. The Bank expects inflation to climb to around 3.75% in the fourth quarter of 2026 and slightly above 4% early in 2027.
Against that, the labour market has softened: unemployment stood at 4.9% in the three months to July and private-sector regular pay growth eased to 2.9%. The majority judged that tight financial conditions and slack in the economy would continue to restrain inflation.
What it means for London
- Mortgages: lenders price fixed-rate mortgages off market expectations as much as Bank Rate itself. Knight Frank noted that renewed Middle East tensions pushed mortgage costs up again in mid-September, after rates had fallen towards 3.5% earlier in the year.
- Property: borrowing costs are one of the main factors behind the fragile recovery in prime London prices.
- Business borrowing: for London businesses, a hold rather than a cut means variable-rate facilities stay at current levels, while a possible rise later in the year is now a real risk to plan for.
What comes next
The next decision is due on 5 November 2026, a week after the Autumn Budget on 28 October. With three members already voting for a rise and inflation expected to climb, markets will watch closely for whether more members shift. Our Autumn Budget guide covers the fiscal side.
Frequently asked questions
What is the Bank of England base rate now?
Bank Rate was held at 3.75% on 17 September 2026.
When is the next Bank of England decision?
The next Monetary Policy Committee decision is due on 5 November 2026.
Why did some members vote to raise rates?
Three members voted for a rise to 4% as CPI inflation rose to 3.1% in August and higher energy prices increased upside risks to inflation.
Sources
- Bank of England — Monetary Policy Summary and minutes
- MTS Insights — Bank of England Monetary Policy Decision: September 2026
- Knight Frank — No News Has Been Good News for the Prime London Market
This article is general information, not financial, tax or investment advice. Figures are taken from the sources listed and were correct at the time of publication.
