Rates Remain At 3.75%

The Bank of England confirmed yesterday (30th April 2026) that it was holding the base interest rate at 3.75%, maintaining a cautious approach as inflation remains above target and external risks continue to cloud the economic outlook. The decision signals a desire for stability while policymakers assess how easing domestic pressures balance against volatility in energy prices and global conditions.

For London’s residential sales market, the rate hold provides a welcome sense of short-term certainty. Mortgage pricing has already adjusted to expectations that rates will remain higher for longer, and the Bank’s decision reduces the immediate risk of further borrowing cost increases. This clearer outlook supports buyer and seller confidence, particularly for those already active in the market.

That said, affordability remains the defining constraint. Borrowing costs are still materially higher than in the ultra-low-rate era, limiting purchasing power and keeping price growth subdued across much of the capital. Activity continues to be led by needs-based movers rather than discretionary or speculative buyers.

In the rental market, the rate decision also plays an important role. Higher interest rates have kept demand for rental homes elevated by delaying buying decisions, while recent rate stability helps landlords manage financing costs without further immediate pressure. However, supply constraints remain unresolved.

The picture is further shaped by the introduction of the Renters’ Rights Act, which came into effect earlier today (1st May 2026) and brings significant changes to how private rented homes are let and managed. While these reforms are expected to influence landlord behaviour over time, the interest-rate environment remains a central driver of rental affordability, investment decisions and supply levels.

Overall, the Bank of England’s decision to hold rates reinforces a period of cautious stability for London’s property market. Sales benefit from improved clarity but remain constrained by affordability, while the lettings market continues to see strong demand against limited stock. Looking ahead, market conditions will remain closely tied to inflation trends and the timing of any future changes in monetary policy.

This article is for informational purposes. Always seek professional advice before making any property or financial decisions.