NEWS·JULY 2026
Bank Holds at 3.75% as Inflation Falls Faster Than Expected
The Bank of England has held Bank Rate at 3.75%, pausing its easing cycle while acknowledging that inflation has fallen further and faster than it expected.
NEWS·JULY 2026
Bank Holds at 3.75% as Inflation Falls Faster Than Expected
The Bank of England has held Bank Rate at 3.75%, pausing its easing cycle while acknowledging that inflation has fallen further and faster than it expected.
The Bank noted that inflation has dropped to 2.6% in recent months, a pace of decline running ahead of its forecasts, but judged that persistence in wage growth justified patience. The next decision falls on 17 September.
Reading the hold
A pause is not a reversal. The direction of rates remains down, and the Bank's own commentary points to further cuts once wage data confirms the disinflation trend. For property, the significance of today's decision is stability: the rate environment is no longer the source of volatility it was between 2022 and 2024.
That stability is quietly transforming market behaviour. Debt is available and pricing is predictable, which has underpinned the recovery in investment volumes through the first half of the year. Buyers can underwrite with confidence, and sellers can no longer wait for a materially different rate backdrop.
For development finance, a stable base rate around current levels keeps viability improving at the margin, particularly when combined with easing build cost inflation. For residential, mortgage pricing has already adjusted to the cuts delivered so far, supporting the steady recovery in transaction volumes.
Our base case remains one or two further cuts by year end, taking Bank Rate towards 3.25%. The era of rates driving the property narrative is ending. Stock selection and fundamentals are back in charge.
The Bank noted that inflation has dropped to 2.6% in recent months, a pace of decline running ahead of its forecasts, but judged that persistence in wage growth justified patience. The next decision falls on 17 September.
Reading the hold
A pause is not a reversal. The direction of rates remains down, and the Bank's own commentary points to further cuts once wage data confirms the disinflation trend. For property, the significance of today's decision is stability: the rate environment is no longer the source of volatility it was between 2022 and 2024.
That stability is quietly transforming market behaviour. Debt is available and pricing is predictable, which has underpinned the recovery in investment volumes through the first half of the year. Buyers can underwrite with confidence, and sellers can no longer wait for a materially different rate backdrop.
For development finance, a stable base rate around current levels keeps viability improving at the margin, particularly when combined with easing build cost inflation. For residential, mortgage pricing has already adjusted to the cuts delivered so far, supporting the steady recovery in transaction volumes.
Our base case remains one or two further cuts by year end, taking Bank Rate towards 3.25%. The era of rates driving the property narrative is ending. Stock selection and fundamentals are back in charge.