Last reviewed: May 2026
TL;DR- The Bank of England base rate stands at 4.25% as of May 2026.
- UK inflation fell to 2.8% in April 2026, its lowest level since 2021.
- The Monetary Policy Committee next meets in June 2026 to set rates.
- Lower inflation increases the case for a rate cut later in 2026.
- Around 1.6 million fixed-rate mortgages are due to expire in 2026.
The Bank of England held its base rate at 4.25% at its May 2026 meeting, leaving borrowing costs unchanged for the second consecutive month. UK inflation fell to 2.8% in the year to April 2026, according to the Office for National Statistics, bringing it closer to the Bank's 2% target and increasing market expectations of a rate reduction later in the year.
Where the Base Rate Stands Now
The Monetary Policy Committee voted to hold rates at 4.25% in May 2026. The base rate has fallen from a peak of 5.25% in August 2023, with the Bank cutting gradually through 2024 and into 2025 as inflation eased. The May 2026 hold reflects continued caution from the MPC as services inflation, which tracks domestically driven price pressures, remains above the headline figure.
The base rate directly affects the cost of variable-rate mortgages, tracker mortgages and some savings accounts. It also influences the rates offered on new fixed-rate mortgage deals, which are priced partly off swap rates in financial markets rather than the base rate alone.
What Falling Inflation Means for Rate Decisions
The ONS confirmed that UK consumer price inflation fell to 2.8% in the year to April 2026, down from 2.6% in March. The fall was driven largely by lower energy bills following a reduction in the Ofgem price cap from April 2026. The Bank of England's 2% inflation target has not been met consistently, but the direction of travel has strengthened the case for further cuts.
Market pricing as of May 2026 implies one or two quarter-point cuts before the end of the year, taking the base rate to between 3.75% and 4.0% by December 2026. These expectations can shift rapidly if inflation or wage growth data surprises in either direction.
Impact on Mortgage Holders and Savers
Approximately 1.6 million fixed-rate mortgages are due to expire during 2026, according to UK Finance data. Borrowers rolling off deals agreed in 2021 or early 2022 at rates below 2% face a significant increase even at current market rates. A rate cut of 0.25 percentage points on a typical tracker mortgage reduces monthly payments by roughly £15 to £25 per £100,000 of outstanding balance, depending on the mortgage term.
For savers, easy-access rates have already begun to fall from their 2023 highs ahead of anticipated base rate cuts. The best easy-access accounts paid around 4.5% to 4.8% in May 2026, down from peaks above 5% in 2024. Further base rate cuts would put additional downward pressure on savings rates.
When Is the Next Bank of England Rate Decision?
The Monetary Policy Committee meets eight times per year. The next scheduled meeting is in June 2026. The Bank publishes its decision at 12:00 noon on the day of the announcement, alongside meeting minutes and, on four occasions per year, a Monetary Policy Report with updated forecasts. The June 2026 meeting is accompanied by a full Monetary Policy Report, making it one of the more significant meetings of the year for rate guidance.
Frequently Asked Questions
Will mortgage rates go down in 2026?
Fixed mortgage rates are priced off swap rates, which reflect market expectations of future base rates. If the Bank of England cuts the base rate as markets expect in late 2026, fixed mortgage rates may fall modestly. However, lenders also factor in their own funding costs and competitive pressures, so mortgage rates do not move in lockstep with the base rate.
How does the base rate affect my savings?
The base rate influences but does not directly determine savings rates. Banks and building societies set their own rates in response to competition and funding needs. Easy-access savings rates have been falling ahead of anticipated base rate cuts. Fixed-rate savings bonds lock in a rate for a set period and may offer better returns if rates fall further.
What is the Bank of England's inflation target?
The Bank of England has a statutory target to keep CPI inflation at 2%, as set by the government. When inflation moves more than 1 percentage point above or below this target, the Governor must write an open letter to the Chancellor explaining the deviation and the MPC's response.
How We Verified This
This article draws on the Bank of England's May 2026 Monetary Policy Summary, ONS Consumer Price Inflation data for April 2026, and UK Finance mortgage lending statistics. All figures verified against primary sources in May 2026.
