The Bank of England’s Monetary Policy Committee has voted 6-3 to keep the base rate unchanged at 4.25% in June, amid ongoing economic uncertainty and persistent inflationary pressures. 3 members voted to cut the interest rate to 4%.
Latest data from the Office for National Statistics for the 12 months to April 2025 shows the Consumer Prices Index (CPI) measure of inflation at 3.4%, which is still well above the government’s 2% target and the highest level since January 2024. With inflation remaining elevated and expected to peak at 3.7% before beginning to decline, commentators now anticipate the base rate may remain at its current level for the next couple of months.
There have been four base rate cuts since summer last year, with the most recent reductions taking place in February and May. However, markets are currently pricing in two further cuts this year - one expected by September and another by December - due to a more rapid weakening of the labour market than previously forecast.
Options for Borrowers
While the base rate remains unchanged, mortgage rates have eased slightly over the past month. According to L&C’s remortgage tracker which tracks average fixed rates for the top 10 lenders, the average two-year fixed mortgage rate fell by 0.08 percentage points between the start of May and June, reaching 4.03%. The average five-year fixed rate edged down by 0.06 percentage points to 4.06% over the same period.
However, these are just average rates, and there are plenty of competitive deals available for those who might want the peace of mind that their monthly payments won’t change even if interest rates do stay higher for longer.
The best deals often don’t stay on the market for long, so if you find one that suits your needs, it’s worth acting quickly. Most lenders allow you to secure a mortgage deal between three and six months in advance. If you're hesitant about locking into a fixed rate at the wrong time, our Rate Check service offers added peace of mind. This service lets you secure a deal now, protecting against potential future rate increases, while still giving you the flexibility to review and switch rates at any point before your mortgage completes.
