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The Bank of England’s Monetary Policy Committee (MPC) voted by 7-2 to leave the base rate unchanged at 3.75% in June, amid concerns that we could see a jump in inflation in coming months.
Even though May’s inflation number held steady at 2,8%, July’s higher energy bills have yet to feed through to households. When they do, this could push inflation up, prompting the Bank to consider raising interest rates to help bring it down again.
There have been six quarter percentage point rate cuts since the summer of 2024, with the first and second reductions having been made in August and November that year and the third, fourth, fifth and sixth in February, May, August and December last year. Markets previously were pricing in two further rate cuts in 2026 but following the conflicts, the Monetary Policy Committee has made it clear that it is poised to respond to any inflationary pressures, which could mean rates rise in coming months.
Kevin Brown, savings expert at financial mutual Scottish Friendly, said: “With tensions seemingly easing in the Middle East – and inflation remaining at 2.8% for May – the backdrop to today’s Monetary Policy Committee meeting was not as fraught as may have been feared.
“Policymakers have now been handed evidence that inflation is not currently accelerating despite the Middle East energy shock. The picture is still far from rosy, but households can take some relief that the Bank of England has not piled a rate hike onto an already complicated picture.”
Here, we explain what this month’s rate hold might mean for you and your finances.
Your savings
Savings rates remain competitive, but it’s still important for savers to take advantage of inflation-beating returns whilst they’re still available.
Alex Beavis, Interim Director of Banking at LHV Bank: “Bank Base Rate may not be moving, but that doesn’t mean savers can’t give their pots a well-earned boost. Now is the perfect time to take action and ensure your savings are working as hard as possible. That may mean shopping around to find a new home for your hard-earned savings pot, but it will be time well spent – there is a new generation of banks who aren’t interested in gimmicks, and instead deliver the sort of value and common sense savers are looking for.
“The gap is stark. With a competitive rate of 4.15%, a saver with £20,000 would earn around £830 in a year versus a typical easy access account paying as little as 1%, which would earn roughly £200 on the same amount – a difference of more than £600 a year. On £10,000, the gap is still around £315 a year; money that savers are leaving on the table.”
Savers have benefited from more competitive options as many savings providers have increased returns on their accounts. As a result, the Moneyfacts Average Savings Rate has risen to 3.57%, its highest point since May 2025.
Fixed savings and fixed ISA rates have seen particularly significant rises, with the average one-year fixed savings rate increasing from 3.79% in March 2026 to 4.24%in June, while the average easy access rate increased from just 2.42% to 2.53% over the same period.
You can find the current best fixed savings rates in our article Where can I find the best fixed savings accounts? and the best cash ISA rates in our guide Best cash ISA rates – which cash ISAs pay the most interest?
Those with longer-term savings goals – more than five years and preferably at least 10 – and who are comfortable accepting a level of risk, may want to consider investing some of their money in the hope of generating inflation-beating returns. However, remember that there’s a chance you could get back less than you put in, so investing isn’t for the faint-hearted, especially given current volatility.
Find out more about whether investing some of your savings could be right for you in our guide Investing – the basics.
What you can do
As mentioned, it’s essential to make sure your savings are working as hard as they possibly can for you, as often banks lure savers in with tempting rates only to reduce them a few months later.
Check savings websites such as Moneyfactscompare.co.uk or Raisin, or price comparison sites such as uSwitch or GoCompare to see if you can find a higher interest-paying account to move to.
If you have money in a fixed rate savings account and you think you could do better elsewhere, check what the penalties are for closing your account. In some cases, it may just be a few months’ interest, and you may be better off moving your money to an account paying higher returns.
Your pension
If you’re approaching retirement and considering using some or all of your pension savings to buy an annuity to provide you with an income, the rate hold is positive, as when rates are higher, this usually means you’ll get more for your money than previously.
The latest data from Hargreave’s Lansdown’s annuity search engine show a 65-year-old with a £100,000 pension can get an income of up to £7,915 per year from a single life level annuity with a five-year guarantee, so people on the lookout for an element of guaranteed income can continue to get good value.
It’s important to do your research first though as once bought an annuity cannot be unwound. Taking the time to gather rates from different providers using an annuity search engine is a great way of making sure you get the best annuity for you.
Find out more in our articles Annuity incomes reach record high – is now the time to buy?, Annuities explained and Why it pays to shop around for your annuity.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
Your mortgage
The Bank’s decision to hold the base rate at 3.75% will come as a relief to homeowners, many of whom are facing a sharp jump in their monthly payments when their fixed rate deals come to an end.
Ben Allen, managing director of The Right Mortgage & Protection Network: said“For the mortgage market, stability is always preferable to surprises. Encouragingly, we have seen lenders across the market cutting rates in recent weeks as swap rates have eased, providing some welcome relief for borrowers and creating opportunities for advisers to help clients secure more competitive deals.
“There is still no guarantee this trend will continue, particularly given the number of economic and geopolitical risks that remain, but the recent direction of travel has been positive. The hope now is swap rates continue to move lower and borrowers can benefit from a more competitive finance environment in the months ahead.”
If your current mortgage deal is finishing soon, you can find out about remortgaging in our article Five good reasons to remortgage now. Learn why mortgage rates move even when the base rate has stayed the same in our guide What are swap rates and how do they affect my mortgage?
What you can do
If you’re on a standard variable rate (SVR), you should remortgage to a cheaper deal if possible, as SVRs are usually the most expensive mortgage rates. You might also want to start looking around for a new deal now if your current mortgage deal is due to end in the next few months, as you can usually secure your next mortgage three to six months before you want it to begin.
If you’re planning to remortgage and are looking for a place to start, we have a mortgage affordability calculator, which will give you a rough estimate of what you might be able to afford, based on current market conditions.
Once you have a rough estimate, it can be helpful to compare different mortgage options to understand what your monthly repayments are likely to be.
Unless your situation is very straightforward, you may want to seek professional advice from a broker to find the best mortgage option for you. The advantage is that they will know which banks and building societies are more likely to accept your application. It’s definitely worthwhile if you are self-employed (unless you have been so for years) or your credit rating isn’t excellent.
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Want to speak to a mortgage adviser? Speaking to an experienced adviser can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 2,600 reviews.
If you’re finding it hard to keep up with your mortgage repayments, please don’t suffer in silence. Our article What can you do if you can’t pay your mortgage? explains what to do if you’re struggling with higher costs.
Your credit card and loans
Borrowing costs are unlikely to change given that rates have been held, but with an uncertain economic outlook, it remains important not to take on more debt if you can possibly avoid it.
If you have expensive short-term debts, it’s worth considering paying them down, and if you don’t have an emergency savings safety net to cover 3-6 months’ worth of essential expenses, it’s worth beefing them up if you can afford to do so.
What you can do
If you’re paying a high rate of interest on your credit card borrowing, try and get a 0% balance transfer credit card deal, so that you can pay off what you owe without being hit by hefty interest charges. Remember though that you must try and clear your balance in full before the introductory 0% period ends, or you’ll start being charged interest.
If you can’t get one, you have the right to reject the interest rate rise within 60 days and close your credit card account. The credit card company must then give you a reasonable time to pay off the money you owe.
If you’re worried that you won’t qualify for a 0% credit card deal, there are several credit checker and credit matcher tools available – and some credit card companies will also give you an indication of whether you’d be successful before you apply.
If you have a loan which you want to pay off quickly, lenders must allow you to do this, although you may be charged an early repayment penalty to do so. Lenders can charge you up to two months extra interest if you choose to pay back your loan sooner than planned. If your loan has less than 12 months left to run, they can only charge you a penalty of up to one month’s interest if you pay it off early.
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