Top Summary – UK interest rates are now at 3.75%, after the Bank of England cut the Bank Rate from 4% earlier in 2026. The rate has since been held at 3.75%, with the next decision due on Thursday, September 17, 2026. For mortgage borrowers, savers and people with other forms of borrowing, the big question now is whether the Bank will cut again or keep rates unchanged. Markets are pricing in a 90% probability. And if you’ve got a mortgage, savings, or any debt, it matters—mid December 2025. The latest available UK CPI inflation figure is 2.9% for July 2026, down considerably from the levels seen during the previous inflation surge but still above the Bank of England’s 2% target. The August inflation figures are due on September 16, just one day before the next Bank Rate decision.
Interest rates: UK’s next meeting Is This Week
The Bank of England’s next interest rate decision is due on Thursday, September 17, 2026, with the Monetary Policy Committee expected to announce its decision at noon. Bank Rate currently stands at 3.75%, following several cuts from the much higher levels seen in 2023 and 2024. The Bank of England’s next meeting is Thursday, December 18, at noon. Every economist surveyed by Reuters expects the Bank to reduce rates by a quarter point. In November, the vote to keep rates unchanged was 5 to 4. Gov. Andrew Bailey voted to hold, but he indicated that better inflation news could make him reconsider. That better news came. Inflation fell. Unemployment ticked up slightly.
Rachel Reeves brought forward her tax-raising Autumn Budget. All of this leaves the Monetary Policy Committee space to cut. But it won’t be unanimous. The MPC’s divided. Some of the members would like to go faster. Others want to wait. Most are likely to support the cut this time around.
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What This Means for Your Mortgage
For UK mortgage holders, this is decent news. Mortgage rates have already started falling. The average two-year fixed-rate mortgage dropped to its lowest level since September 2022. Five-year fixes fell too. If you’re on a variable rate mortgage or a tracker, your payments should drop fairly quickly after the cut. Your lender will pass on most of the reduction, though not always immediately.
If you’re on a fixed rate, you won’t see any change till your fix ends. But when it does, the rates available should be better than they were a few months ago. Shaun Sturgess, a mortgage broker in Swansea, reckons 2026’s “shaping up to be a far more active year than 2025, with lower mortgage rates powering the property market.”
Savers Are Getting Squeezed
For savers, it’s the opposite. Interest rates on UK savings have been dropping for months. The average savings rate fell to 3.39% in early December. That’s the lowest in more than two years. And it’s below the inflation rate of 3.8%. That means if you’ve got money sitting in an average savings account, you’re actually losing purchasing power. Your money’s growing, but not as fast as prices are rising.
The best easy-access accounts are still paying around 4.5%. Chase’s saver is paying 4.50%, including a bonus. Trading 212 is paying 4.52% on easy access. But you need to shop around. High street banks are still paying 2% or 3% on some accounts, which is frankly taking the piss when the base rate’s at 4%. Fixed-rate savings have dropped, too. The best one-year fixed rate is now around 4.5%, down from over 5% earlier in the year. If you want to lock in a decent rate before they fall further, now might be the time.
Bank interest rates in the UK Vary Massively
Bank interest rates in the UK are all over the place, depending on which bank you’re with. Some high street banks are paying less than 3% on easy access accounts. Online banks and building societies are paying 4% to 4.5%. Regular savers can get up to 7.5% with some providers like Zopa and First Direct, but there are catches. You can only save a certain amount each month, usually £250 to £300.
And you can’t withdraw without losing the rate. The personal savings allowance means basic rate taxpayers can earn £1,000 in interest tax-free each year. Higher-rate taxpayers get £500. If you’re earning more interest than that, it gets taxed. That’s where ISAs come in handy. Cash ISAs are tax-free, though the rates are often slightly lower.
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Interest rates UK predictions for Next Year
Interest rates UK predictions suggest the base rate will keep falling through 2026. The OECD reckons the Bank will cut twice more by June, taking the rate to 3.5%, then stop. Money markets are pricing in two cuts in 2026, possibly three. Goldman Sachs expects gradual reductions through mid-2026. DeVere Group’s chief executive thinks we’ll get a December cut followed by three more in 2026.
But nobody knows for certain. It depends entirely on inflation. If inflation stays stubbornly above 2%, the Bank will slow down or stop cutting. If it falls quickly, they might cut faster. The Bank’s trying to balance two things. They don’t want inflation to stay high. But they also don’t want it falling too low, which can cause deflation. That’s when prices fall, businesses make less money, and they start cutting wages and staff.
Use an interest rate calculator to Work Out Your Situation
To find out what this means in real terms, you’d need a UK interest rate calculator. If you have an existing £200,000 mortgage on a variable rate of 5 per cent, a quarter-point cut means you will save about £40 a month. That comes to about £500 a year. In terms of savings, if you have £10,000 in an account that pays 4%, you will receive £400 a year. Ease that rate down to 3.75%, and you are banking £375. It’s only 25 quid, but it all adds up. Most providers of mortgages and savings have calculators on their websites. Plug in your numbers and watch what happens when interest rates change.
The Bigger Picture
The bank’s been cutting rates since August 2024. They’ve already reduced the rate several times, lowering it from 5.25% to 4%. That is 1.25 percentage points in total. But rates also went up a lot before that. From 0.1% in December 2021 to 5.25% in August 2023. That was the Bank’s reaction to inflation reaching 11.1% in October 2022. Now inflation has fallen to 3.6%, which is why they can cut.
But it’s still above target. Services inflation’s particularly sticky. Hotels, restaurants, wages. These aren’t falling as quickly as goods prices. Rachel Reeves’ Budget added complexity. Higher employer National Insurance contributions might push businesses to raise prices. But measures to reduce household energy bills and freeze fuel duty should help bring inflation down.
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What Should You Actually Do?
If you’ve got savings, shop around. Don’t just stick with your current bank because it’s convenient. Moving to a better rate could earn you hundreds of pounds extra each year. If you’re on a variable rate mortgage, enjoy the cuts when they come. If your fix is ending soon, look at what’s available now. Rates are falling, so waiting might get you a better deal. But if you see a rate you’re happy with, grab it.
And if you’re thinking about borrowing money or making big purchases, lower rates make debt cheaper. But that doesn’t mean you should borrow more than you can afford. Interest rates might be falling, but they’re still historically high compared to the 2010s. The UK interest rates story isn’t over.
The UK interest rate story has moved on significantly since the end of 2025. Bank Rate is now 3.75%, but the next stage is less straightforward. Inflation is much closer to the Bank of England’s 2% target, while energy prices and other inflation pressures could still complicate the outlook. With the next MPC decision due on September 17, the latest inflation figures and the Bank’s assessment of the economy will be crucial. For households, the message is simple: mortgage borrowers should compare deals, savers should check their rates, and anyone considering new borrowing should avoid assuming that rates will keep falling indefinitely.
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