Bank of England holds base rate at 4% ahead of Autumn Budget

This gives the economy time to digest measures announced on 26 November.

With the Autumn Budget only a few weeks away, the Bank of England’s Monetary Policy Committee (MPC) refrained from making any changes to the base rate today and instead voted to hold the UK’s central interest rate at 4% for a second consecutive time.

This outcome was largely expected. While inflation rising at a slower-than-anticipated pace of 3.8% in September offered a window of opportunity to lower the base rate, it may be that the MPC is waiting to see what effects any measures announced in the Budget have on the economy before it takes decisive action.

Savers may still need to take action

Savers may still need to take action, as it’s been reported that the Chancellor of the Exchequer, Rachel Reeves, is looking to stimulate greater levels of investing by reducing the amount savers can deposit in cash ISAs each year from £20,000 to £10,000.

“It is unlikely such a radical change would happen overnight, so savers should not panic,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk. However, she added that it would be unwise of savers not to review their old accounts and make the most of their remaining cash ISA allowance.

“This is particularly important for those impacted by fiscal drag, where basic-rate taxpayers who edge up into the higher-rate tax bracket at 40% will have their Personal Savings Allowance (PSA) halved from £1,000 to £500,” Springall explained.

Despite seeing a significant decline over the past year as providers acted quickly to pass on previous base rate reductions, the average returns on an easy access ISA held fairly steady between October and November – dropping by just 0.01 percentage point to 2.71%. What’s more, many of the most competitive accounts in the sector continue to pay more than 4.00% (although savers should keep a close eye on when any introductory bonuses are set to expire).

Meanwhile, “frustrated savers who are fed up of seeing their cash eroded by inflation might be more inclined to open a fixed bond or ISA,” said Springall. Many of the market-leading accounts in these sectors also offer in excess of 4.00%.

How might the mortgage market be affected?

It’s not just savers who stand to be affected by measures unveiled in the Budget later this month. A cut to the cash ISA allowance “could also cause havoc in the mortgage market, as it would reduce funding for loans,” warned Springall, which in turn could drive up borrowing costs.

“Memories of previous Budgets (and their aftermaths) live long in the minds of consumers, which could explain why we’ve seen increased appetite among remortgage borrowers looking to secure a new deal over the past month,” said Oliver Dack, Spokesperson at Mortgage Advice Bureau.

A change to the cash ISA allowance isn’t the only rumour making the rounds. There are also suggestions that the Chancellor is looking to replace stamp duty with a new form of property taxation. “The proposals on paying tax put the burden on sellers, rather than buyers,” explained Springall. She added that other ideas being floated include removing Capital Gains Tax (CGT) exemptions on primary residences and the introduction of a ‘mansion tax’ on high-valued properties.

“In contrast to the refinance market, we’re seeing a number of house purchase customers delay their search as they wait to find out how they may be impacted by potential tax changes,” said Dack. Nevertheless, he reminded prospective buyers that it may still be worth speaking to a mortgage broker sooner rather than later to prepare for a wide range of eventualities.

Even though the base rate has stood at its current level since August 2025, many lenders have taken encouragement from a less volatile swap market to lower their rates over recent weeks. As a result, the typical rate charged by a two-year fixed mortgage fell from 4.98% in October to 4.94% by the start of this month, while average five-year fixed mortgage rates dropped by a smaller margin from 5.02% to 5.01% over the same period. Furthermore, the Moneyfacts Average Mortgage Rate reached a major milestone after dipping below 5.00% earlier this week for the first time (sustainably) in more than three years.

But, there’s no guarantee this positive momentum will continue. “As we quickly approach the end of the year, it may be that some lenders are already ahead of their targets and are no longer chasing the market,” said Dack. And, with the average Standard Variable Rate (SVR) going unchanged month-on-month at 7.27%, too much hesitation could prove costly.