Bank Rate Held at 3.75% — But Three Members Voted for a Rise

By Lisa Hayes · 18 September 2026

The Bank of England left Bank Rate at 3.75% on 17 September, the sixth meeting in a row without a change. The headline is the hold. The story is the vote: six members wanted to hold, three wanted to put rates up to 4% — and the Bank now expects inflation to climb past 4% in early 2027. If you're selling this autumn, the cheap-mortgage rescue a lot of people have been waiting for is not coming, and you should stop building your plans around it.

What actually happened on 17 September?

The Monetary Policy Committee met on 16 September and published its decision the following morning. It voted by a majority of 6–3 to keep Bank Rate at 3.75%. Three members preferred to raise it by 0.25 percentage points, to 4%.

That split matters more than the number. For most of the past year the argument inside the Bank has been about how fast to cut. It isn't any more. A third of the committee now thinks the next move should be upwards, and they set out their reasoning in writing.

Position	Members	Reasoning, in short
Hold at 3.75% (6)	Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Dave Ramsden, Alan Taylor	Energy is pushing inflation up, but weak domestic demand and already-tight financial conditions are doing the restraining for them.
Raise to 4.00% (3)	Megan Greene, Catherine L Mann, Huw Pill	Inflation will peak in early 2027, exactly when pay settlements are agreed. Better to act early than course-correct late.

Within the majority, two members — Swati Dhingra and Alan Taylor — were explicitly the most dovish, arguing that slack in the economy and restrained pass-through of costs into prices justify waiting for more evidence. So the committee isn't really six against three. It's a spectrum running from "wait and see" to "raise now", with nobody at all arguing for a cut.

The Bank's own summary language is worth quoting, because it is unusually pointed. The MPC judged that risks to the inflation outlook are "tilted to the upside, and more so than at the time of the July Monetary Policy Report". Central banks do not write sentences like that by accident.

Why are rates going up when the housing market is this weak?

Because the Bank isn't targeting the housing market. It targets 2% inflation, and inflation is heading the wrong way for reasons that have very little to do with British homeowners.

The proximate cause is energy. Protracted conflict in the Middle East, plus continued fighting in Ukraine and damage to Russian energy infrastructure, has pushed wholesale prices sharply higher. Since the July Monetary Policy Report, according to the Bank's minutes, the spot price of Brent crude is up 36% and UK wholesale gas is up 78%. As at close of business on 14 September, Brent had reached $106 a barrel and UK wholesale gas 207 pence per therm.

• 3.1%UK CPI inflation, August 2026
• $106Brent crude, per barrel (14 Sept)
• +78%UK wholesale gas since July
• £1,723Ofgem cap, Oct–Dec 2026

That feeds through in two stages. First, directly: around 0.7 percentage points of August's 1.1-point overshoot above target came straight from energy prices, mostly motor fuels. Ofgem's headline price cap for October to December has been set at £1,723, higher than the Bank expected in July, and the Bank now expects the cap to rise substantially further in the first quarter of 2027.

Second, indirectly, through everything else. Firms have so far absorbed a lot of the cost in margins, hedges and stored energy. Those are temporary buffers. The Bank's view is blunt: the indirect effects may have been delayed rather than diminished. Food is the clearest example. The Bank's regional Agents now expect annual food inflation of around 4% by the end of 2026, better than the 6–7% feared back in April, but with clear upside risks into 2027 from drought conditions in Europe and a possible severe El Niño.

Put it together and the Bank's short-term projection now has inflation reaching roughly 3¾% in the final quarter of 2026 and slightly above 4% in early 2027. In July it thought Q4 would be 3.2%. That is a substantial upward revision in eight weeks, and it is almost entirely down to oil and gas.

The thing the hawks are actually worried about

Not energy itself. Second-round effects.

The Bank cannot do anything about the price of a barrel of oil. What it can influence is whether an energy shock hardens into permanently higher pay settlements and price-setting. Right now there is, in the committee's assessment, little hard evidence of that happening. Private-sector regular pay growth was 2.9% in the three months to July, underlying wage growth is judged to be around 3½%, and forward-looking survey measures haven't jumped: firms responding to the Bank's Decision Maker Panel still expect one-year-ahead wage growth of 3.4%, unchanged since before the conflict started.

But the three dissenters made a timing argument that is hard to dismiss. Inflation is forecast to peak in early 2027 — precisely the window in which most UK pay settlements are negotiated. If people are bargaining against a 4%-plus headline, settlements drift up, and the Bank ends up chasing the problem instead of pre-empting it. Their position, recorded in the minutes, is that setting policy as if second-round effects are strong — and reversing later if you were wrong — is less costly than the other way round.

And the safety valve the doves rely on may be closing. The unemployment rate was 4.9% in the three months to July, unchanged since April, and the committee now judges that the slack which had been opening up has probably stabilised. GDP grew 0.4% in the second quarter, monthly GDP rose 0.4% in July, and Bank staff now project 0.4% for the third quarter against the 0.1% pencilled in back in July. A stronger economy is welcome news in almost every respect except this one: it removes the disinflationary cushion that made holding rates comfortable.

Does a hold mean my mortgage rate is safe?

No. This is the most misunderstood point in every rate-decision news cycle, so it's worth being precise about it.

Bank Rate directly sets what you pay on a tracker mortgage and heavily influences standard variable rates. If you're on a tracker while you sell, yesterday's hold genuinely means your payment doesn't move. That's real relief, and it lasts at least until 5 November.

Fixed rates are a different animal. Lenders price fixes off swap rates — the cost of buying fixed-rate money in the wholesale market — and swaps move on what traders expect Bank Rate to do over the next two or five years, not on what it did this morning. If the terminology is doing your head in, our property jargon explained guide unpacks it without the finance-desk vocabulary.

Here's the uncomfortable part. The Bank's own minutes note that UK financial conditions have tightened further since July, that pass-through from short-term market rates to retail lending rates has been "full and fast", and that the quoted rate on a two-year fix is now around 95 basis points higher than before the conflict began. Call it a percentage point added to borrowing costs, with Bank Rate unchanged throughout.

The forward curve points the same way. The Bank records that the UK short-term interest rate curve is upward sloping and has risen further in recent weeks, peaking at around 4.9% by the end of 2027. Market intelligence gathered in the days before the meeting showed the perceived probability of near-term rate rises had increased. The wider bond market is under real strain too: the 30-year gilt yield recently hit its highest level since 1998. And on 16 September the US Federal Reserve raised rates by 0.25 percentage points to a 3.75%–4% target range — its first increase in more than three years, and a unanimous one.

Which explains why average fixed rates look the way they do. According to Moneyfacts data as at 16 September, the average two-year fixed rate stood at around 5.77% and the average five-year fix at around 5.83%. Plenty of borrowers with decent equity will beat those averages comfortably — averages include a lot of high-loan-to-value products. But the direction of travel over recent weeks has been up, not down, and several lenders repriced before the MPC even sat down.

Amy Reynolds, head of sales at Antony Roberts, put it plainly: "Lenders haven't waited for the Bank of England. Mortgage rates have been edging up this week ahead of today's decision, which tells you the market has already stopped pricing in quick cuts." She added that buyers waiting for a cheaper mortgage to rescue their budget "could be waiting a long time". That is the sentence sellers should read twice.

What does this mean for house prices?

It means the stalemate we've been in since the spring continues, and the various indices carry on disagreeing with each other in ways that confuse everyone.

Index	What it measures	Latest reading
Nationwide (August)	Its own mortgage-approved purchases	+0.2% monthly, +1.6% annual, average £275,465
Lloyds / Halifax (August)	Its own mortgage-approved purchases	−0.2% monthly, −0.4% annual, average £298,468
ONS / Land Registry	Completed sales, all buyers including cash	+1.4% annual

Three respectable organisations, three different answers, none of them wrong. They use different samples, different stages of the transaction and different time lags. Nationwide and Lloyds only see their own lending. The ONS sees completions, which reflect deals agreed three to five months earlier — so ONS data tells you about the recent past, not about today. We keep a running plain-English read on all of them on our UK house prices page.

The honest summary is this: nominal prices are roughly flat, drifting slightly one way or the other depending on whose numbers you prefer. But with inflation at 3.1% and heading towards 4%, housing is losing value in real terms even when the headline number is positive. That's not a crash. It's erosion. And it's the reason "wait for the market to come back" is a more expensive strategy than it sounds — a year of waiting for a 1% nominal gain against 3.5% inflation leaves you meaningfully worse off, before you count another twelve months of mortgage payments, council tax and insurance on a house you no longer want.

The activity data is where the strain really shows. Mortgage approvals have fallen back, agreed sales dropped over the summer, and surveyors have been reporting negative buyer demand balances for months. Fewer buyers, more choice, and buyers who know perfectly well that they hold the cards.

If you're selling this autumn, what does the hold actually change?

Very little — which is exactly the point. The Bank's decision neither rescues you nor sinks you. Your outcome will be decided by pricing and by how well you manage the chain.

Marc von Grundherr, director of Benham and Reeves, made the seller's point better than we could: "Where asking prices reflect today's affordability constraints, deals are still being done. Where they don't, sellers will continue to see their property sit on the market with little to no interest."

That is the whole market in two sentences. There is no shortage of buyers for correctly priced homes. There is a total absence of buyers for hopefully priced ones.

What should you do now?

Six things, in the order we'd do them.

1. Price to today's affordability, not last year's valuation. If your expectation was formed when someone valued your house in 2024, it's out of date by roughly a percentage point of mortgage cost — which translates into real money off what a buyer can borrow. Get a fresh, honest read first. Our how much is my house worth guide walks you through doing that properly rather than optimistically.

2. Assume nothing gets cheaper before spring. Nobody on the MPC voted for a cut. The market curve implies 4.9% by end-2027. Build your plan around rates staying here or rising, and treat any improvement as a bonus rather than a foundation.

3. Sort your own mortgage before you sort your sale. If your fix ends within six months, reserve a new rate now. Most lenders let you lock a deal months ahead and switch if something better appears before completion. In a market drifting upwards, that's free optionality — and it stops a rate rise ambushing you halfway through a chain.

4. Be ruthless about the first three weeks. Listings get their best traffic early, while the portal alerts are still firing. No viewings in the first fortnight and no offers by week three means the price is wrong. Cutting in week four costs you far less than cutting in month four, when your listing already looks stale and buyers assume something's up with the property.

5. Value certainty properly. With fall-throughs running high, a slightly lower offer from a chain-free buyer is often worth more in real terms than a higher offer that collapses in November. Work out what six extra months of mortgage, bills and stress genuinely costs you, then compare offers on that basis rather than on the headline figure alone.

6. If speed matters more than the last few per cent, look at the alternatives with your eyes open. Genuine cash house buyers can complete in weeks rather than months, which strips out chain risk and rate risk entirely. You will not get full market value, and anyone promising you that isn't being straight with you. Our sell house fast guide sets out what the discount typically looks like and when the trade-off is worth making. For a lot of people it isn't. For someone facing a broken chain, a repossession deadline, a divorce settlement or a probate property they can't afford to maintain, it very much is.

What happens next?

Two dates matter, and they sit close together.

The Autumn Budget comes first. Property taxation has been the subject of persistent speculation for months, and the speculation itself is doing damage — buyers and sellers postpone decisions when they think the rules might change under them. Whatever is actually announced, the clarity will be worth something to the market.

Then 5 November, the next MPC decision. Three members are already voting to raise. If energy prices stay where they are, if the Q4 inflation print comes in near 3¾%, and if the labour market keeps stabilising rather than deteriorating, it isn't hard to see one more member crossing the floor. That's all it would take.

Nigel Bishop of Recoco Property Search framed the sequencing well: "A hike in interest rates later this year is still very much on the table but the Bank of England probably first wants to hear if next month's Autumn Budget introduces any policies that tackle inflation."

There was also a quieter decision buried in the minutes that will matter over years rather than weeks. The MPC voted unanimously to run the stock of gilts held for monetary policy purposes all the way down to zero, through a multi-year plan averaging around £46 billion a year until the end of 2034, including £20 billion of active sales annually. The Asset Purchase Facility has already fallen from a peak of £895 billion in February 2022 to £488 billion this month. More gilts being sold into the market, for longer, is one more structural reason not to expect long-term borrowing costs to fall back towards 2021 levels any time this decade.

Our honest view

We think the coverage of this decision has been too soothing. "Rates held" reads as stability. It isn't stability. It's a committee that has stopped debating cuts and started debating rises, sitting on top of an inflation forecast that gets worse before it gets better.

For homeowners, the practical consequence is straightforward. Mortgage pricing has already tightened by roughly a percentage point without Bank Rate moving at all, which tells you how little the headline number controls what you'll actually be quoted. If your plan for 2027 depends on cheaper borrowing making your move affordable, that plan needs revisiting now, not in March.

Jeremy Leaf, the north London estate agent, described the backdrop as "an already fragile, price-sensitive housing market", and noted that swap rates at a three-year high are prompting lenders to push up mortgage pricing. Price-sensitive is the operative phrase. In a market like this one, price isn't a factor among many. It's the factor.

There's a more optimistic reading, and it's worth hearing. Richard Merrett, managing director of Alexander Hall, argues that base rate is only one element of affordability, that lender criteria have improved considerably over the past year, and that "the stability of a hold decision, alongside improving borrowing capacity and more affordable house prices, represents a significant buying opportunity". He has a point about criteria. We'd just note that improved criteria help buyers stretch; they don't make your house worth more.

The bottom line

Bank Rate is 3.75% and stays there until at least 5 November. Inflation is 3.1% and rising towards 4%. Three of nine MPC members want rates higher already. Fixed mortgage rates have climbed roughly a percentage point since the conflict began, entirely independently of Bank Rate, and the forward curve says they're more likely to rise than fall from here.

None of that means you can't sell. It means you sell on today's numbers rather than the ones you were hoping for. Price it properly, present it properly, and take certainty seriously when it's offered to you.

If you're weighing up your options, it's worth finding out what the market will actually pay before you commit to a route. You can compare offers from vetted buyers with no obligation, put a real number alongside the estate agent's estimate, and decide from there with your eyes open. No pressure either way — just better information than a headline about a rate that didn't move.