Bank of England holds base rate at 3.75% — what the June 2026 decision means for your mortgage
The Bank of England's Monetary Policy Committee voted 7-2 to hold the base rate at 3.75% in June 2026. Here is what the decision and the inflation outlook mean for UK mortgage payments at different loan sizes.
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The Bank of England held its base rate at 3.75% at its June 2026 meeting. Policymakers cited uncertainty over the impact of high energy prices as the reason for the hold (BBC, June 2026).
The MPC vote was 7-2. Two members, Huw Pill and Megan Greene, voted to raise the base rate to 4%, with Greene highlighting uncertainty over the impact of higher energy prices on households and businesses (BBC, June 2026).
Inflation stood at 2.8% in the year to May 2026, according to the Office for National Statistics (ONS). The MPC lowered its overall inflation expectations compared to its April meeting, projecting that the rate will reach 3.25% in the final three months of 2026 (BBC, June 2026).
Ofgem's energy price cap, which governs the bills of millions of UK households, is set to increase by 13% in July 2026, according to the BBC. The Bank's policymakers noted that oil prices remained higher than before the Middle East conflict and had continued to be volatile.
Separate ONS data showed the UK borrowed £23.3bn in May 2026, up almost a third on the same month the previous year and £5.6bn above the Office for Budget Responsibility's forecast (BBC, June 2026). Interest payable on government debt reached £11.7bn in May, the highest ever recorded for any May, according to the ONS.
What this means for your mortgage
On a £250,000 repayment mortgage over 25 years at 3.75%, the monthly payment is approximately £1,285. Stretched to a 30-year term at the same rate, the monthly payment falls to approximately £1,158. Calculate Your Monthly Payment →
The 7-2 MPC split shows that two members judged conditions already warranted a move to 4%. On a £250,000 repayment mortgage over 25 years, the payment at 3.75% is approximately £1,285; at 4.00% it rises to approximately £1,320. Over a 30-year term, the payment at 3.75% is approximately £1,158; at 4.00% it rises to approximately £1,194.
For larger and smaller loans, the absolute payment figures shift accordingly. On a £500,000 repayment mortgage over 25 years, the payment at 3.75% is approximately £2,571; at 4.00% it rises to approximately £2,639. On a £150,000 loan over the same term, the payment at 3.75% is approximately £771; at 4.00% it rises to approximately £792. Compare Mortgage Scenarios →
Borrowers whose fixed-rate terms end in the coming months face this remortgaging decision against a backdrop of a 13% Ofgem price cap rise in July 2026 and an MPC that has lowered its inflation projection to 3.25% for the final quarter of the year. Running the payment figures across different loan sizes and terms before selecting a new deal puts the monthly cost of each scenario in concrete terms. Compare Mortgage Scenarios →
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