The decision

On 18 June the Monetary Policy Committee held the base rate at 3.75%, voting 7 to 2. Notably, the two dissenters wanted a rise to 4%, not a cut, a hawkish tilt that reflects inflation proving stickier than hoped. CPI held at 2.8% in May, with higher transport costs offsetting slower food inflation.

The Bank kept the door open to cuts later in the year if inflation falls. The next decision is on 30 July.

Why lenders are cutting anyway

Despite the hold, Nationwide, NatWest, Barclays, TSB and Santander have all continued trimming fixed rates. This is the same dynamic we flagged in May: fixed pricing follows swap rates and expectations, not the overnight base rate.

With a couple of cuts still expected before year end, lenders are competing hard for volume now rather than waiting. For borrowers, a held base rate alongside falling fixed rates is close to the best short-term combination available.

What it means for property investors

  • The remortgage case keeps improving. Anyone rolling off a 2023 or early-2024 fix should be actively quoting. The spread between maturing rates and new products is the widest it has been in two years.
  • Purchase affordability is easing at the edges, which supports transaction volumes through the summer even with a soft headline price market.
  • Do not bank on July. A 7 to 2 vote with two members wanting a hike is not a committee about to cut aggressively. Underwrite at today's rates and treat a July cut as a bonus.

How we are positioning

We continue to stress-test every deal at current rates with no assumed cuts, and we prioritise assets where the rental income stands on its own without needing rate relief to work. Cheaper debt, when it comes, improves an already-sound deal. It should never be the reason a deal looks sound.

The bottom line

A hold with a hawkish split, paired with a lender price war, is a workable backdrop for investors: stable policy, falling borrowing costs and a softer purchase market that hands negotiating power to buyers. The discipline is to lock in financing gains without betting the underwriting on cuts that may not come.