The Bank of England has met to discuss its latest interest rates decision

The Bank of England has held its base interest rate at 4% as widely expected by economists.

The base rate influences rates on products where interest is applied - so for example, mortgages and loans. It also impacts savings rates, so how much return you get on any money you have put away.

Whenever the base rate changes, or is due to change, banks and lenders will update the interest rates on their borrowing and saving products.

Interest rates remain at their lowest level for more than two years, having slowly been reduced from their peak of 5.25%. The base rate reached this level in August 2023 and remained this high until August 2024, when the Bank of England announce its first cut to 5%.

It has been cut several more times since then, to its current level of 4%. The most recent cut was announced during the last Bank of England meeting in August 2025.

The latest Bank of England decision comes after inflation remained at 3.8% in August. While it is good news that inflation did not rise again, it is still higher than the 2% target the Bank of England is aiming for.

Andrew Bailey, Governor of the Bank of England, said: "We held interest rates at 4% today. Although we expect inflation to return to our 2% target, we're not out of the woods yet so any future cuts will need to be made gradually and carefully."

How it affects your mortgage

There are different types of mortgages available and which one you have will determine whether you see any changes when the base rate is updated.

Tracker mortgages follow the movement of the base rate - so if it goes down, then your mortgage payments will be reduced. As the base rate has not changed today, then you won't see any change to your monthly repayments.

If you have a standard variable rate (SVR) mortgage, then it is down to your mortgage lender to decide if they pass on any base rate changes. Again, as no changes have been announced today, it is unlikely you will see any alterations to your mortgage payments.

There are around 1.3 million households on a tracker or SVR mortgage. If you have a fixed rate mortgage, your payments do not move in line with the base rate, as you have already agreed to pay a fixed amount every month for a set period of time.

This means your payments won't change until your fixed deal has ended, regardless of what happens with the base rate. If you don't fix into a new deal, you'll usually be moved to the SVR of your existing lender once your current mortgage deal ends.

An estimated 1.8 million fixed rate mortgages are set to expire in 2025. Mortgage experts advise that you stay prepared, and start considering what options are available to you before your current deal expires.

How it affects your debt

If your credit card is linked to the base rate, then how much you pay back in interest can change when it is updated. The average credit card purchase APR is around 35%, according to Moneyfacts.

As there is no change to the base rate today, you should not see any changes to your credit card if it is linked to the base rate. Not all credit cards are linked to the base rate, and the rates on these are variable so they can change from time to time anyway.

Interest rates on personal loans and car financing are normally fixed. This means if you're in the middle of an agreement, this should not change even when the base rate is updated, as you have already agreed set repayments.

However, a change in the base rate can impact the rates that are applied to new loan agreements.

How it affects your savings

We saw massive improvements in savings rates when the base rate went up previously - and although they have come down since then, there are still savings rates that are higher than inflation.

MoneySavingExpert.com lists the best easy-access rate as 4.75% from Chase - however, this is only for new customers, as part of this is a 2.25% bonus rate that applies for 12 months.

The best rate on an easy-access cash ISA is 4.38% from Trading 212 for new customers. This includes a 0.53% newbie bonus. You can pay up to £20,000 into an ISA each tax year and any interest you make is free from tax.

If you can afford to lock your cash away, MSE says the top fixed rate account is from Birmingham Bank and this pays 4.53% - although this is for a five-year fix.

For a shorter fix, it is possible to get a rate of 4.45% locked for one year with Tandem Bank, or 4.47% for three months with Chetwood Bank.

There are also notice accounts, with Oxbury Bank topping the MSE table with a rate of 4.54% if you give 120 days notice for when you want to make a withdrawal.

Regular savings accounts offer the best rates, but these come with strict terms and conditions. You can normally only make small deposits each month and some accounts restrict how many withdrawals you can make.

Principality Building Society pays 7.5% fixed for six months but you can only deposit up to £200 each month.

Bank of England announces next interest rates move - what it means for you