Bank of England Base Rate Update: November 2025
The Bank of England has announced its latest base rate decision, and you might be wondering what it means for mortgages, savings and day-to-day money decisions.
What Has the Bank of England Decided?
At the meeting held on 5 November 2025, the Monetary Policy Committee voted by a narrow margin to keep the base rate at 4 percent.
It was a close call: five members voted to hold the rate where it is, while four wanted to reduce it slightly to 3.75 percent.
You might find this tight split a bit surprising, but it shows that the economy is in a delicate place. Things are improving on the inflation front, yet there’s still uncertainty about how strong the improvement really is.
Why Did They Keep the Rate at 4 Percent?
The decision comes down to one main question: is inflation falling quickly enough?
The Committee agreed that inflation has peaked, and the overall trend is moving in the right direction. Rising prices in areas such as services and wages have started to ease. Wage growth is slowing, and businesses aren’t putting prices up as quickly as they were. These are encouraging signs.
However, the Committee also needs to be confident that inflation will keep falling and settle at the target of 2 percent. Some members still worry that inflation could stick around for longer than expected, especially if wage and price-setting habits have shifted permanently since the pandemic.
So for now, they’ve chosen to wait for more proof before lowering rates further.
What’s Happening with Inflation?
- Inflation has peaked and is easing.
- A large part of the price rises earlier in the year came from changes to energy prices and temporary supply problems, rather than ongoing issues.
- Wage growth is slowing, which usually helps reduce inflation over time.
- Some Committee members still worry that higher inflation expectations among households could keep prices and wages rising for longer.
The overall view is cautiously optimistic. Inflation is heading the right way, but the Bank wants to be sure the trend is stable before making bigger moves.
What’s Going On in the Economy?
Economic growth is pretty subdued at the moment. People are spending less, businesses are being more careful, and the job market is loosening slowly. These signs suggest that demand in the economy is weakening, and when demand falls, inflation usually comes down too.
The Committee also expects more “slack” to appear in the economy. In simple terms, slack means spare capacity: fewer job vacancies, slower spending and more competition among businesses. This usually helps push inflation lower.
Some members believe this spare capacity is already bigger than the official forecasts show. Others think the picture is more complicated because the job market has changed since the pandemic.
Why Are Some Members Pushing for a Rate Cut?
Four members wanted to reduce the base rate to 3.75 percent. They felt confident that inflation is firmly on its way down and that the economy is weakening enough to help keep it under control. Their view is that keeping rates too high for too long could unnecessarily slow the economy and even push inflation too low in the medium term.
Their key concerns include:
- Slowing consumer spending
- A noticeable drop in business confidence
- Higher precautionary saving among households
- The risk that keeping rates high could hold the economy back more than intended
In short, they believe the Bank could ease off the brakes a little without risking a return to high inflation.
Why Did the Other Members Vote to Hold the Rate?
The five members who preferred to keep the rate at 4 percent want more certainty before acting. They agree that inflation is heading in the right direction but are concerned that:
- Wage inflation could stay higher than expected
- Households’ inflation expectations are still elevated
- Structural changes in the job market may reduce the amount of slack
- Lowering rates too soon could undo the progress already made
Their view is that small signs of improvement don’t guarantee long-term stability. They’d rather wait for clearer proof before reducing rates.
What Happens Next?
The Committee hinted that if disinflation continues, the base rate is likely to follow a gradual downward path. They’re not promising anything yet, but the direction of travel could be towards more cuts in the future.
The next big factor to watch is the Budget announcement on 26 November, along with upcoming economic data on wages, jobs and consumer spending.
For now, the Bank is treading carefully. They believe the risks are more balanced than before, meaning there’s less fear of high inflation and more concern about weaker demand.
What Does This Mean for You?
If you’re a homeowner, a buyer or someone planning ahead, here’s the impact in practical terms:
- Mortgage rates won’t change immediately as the base rate is staying at 4 percent.
- Lenders may begin to price in future cuts if they believe the rate will fall next year.
- If you’re on a variable or tracker mortgage, your payments stay the same for now.
- If you’re remortgaging, the market outlook is still positive, with lenders likely to continue competing on price.
- If you’re a first-time buyer, calmer inflation and stable rates could help with planning and affordability.
The situation is moving, and small shifts in lender pricing can make a big difference. Getting tailored advice can help you make the most of the current environment.
Conclusion
This month’s base rate decision shows that the Bank of England is becoming more confident about inflation but still wants to see a bit more evidence before easing policy further. With the vote split so closely, it’s clear that the economy is at a turning point.
If you’re unsure how this affects your mortgage, buying plans or remortgage options, feel free to get in touch with us at Kerr & Watson. We can look at your situation, explain your options and help you make informed decisions based on the latest market conditions.
Read more: Bank Rate maintained at 4% – November 2025
