Bank of England Interest Rate Decision: What It Means for Your Money in 2025

By Samuel Mather-Holgate

On Thursday 19 June, the Bank of England (BoE) will make one of its most closely watched decisions of the year — whether to change interest rates or hold steady at 4.25%.

And while the headline decision is likely to be “no change”, that doesn’t mean this moment lacks importance. In fact, it may mark a turning point for your mortgage, savings, and investment strategy.

As independent financial advisers, we believe it’s vital our clients understand not just what’s happening — but why it matters.

What Are Interest Rates, and Why Do They Matter?

The Bank of England base rate influences borrowing and saving across the country. When the BoE raises rates, loans and mortgages become more expensive — but savers typically earn more. When it cuts rates, borrowing becomes cheaper — and savers see lower returns.

This base rate ripples through the economy, affecting:

• Mortgage rates (especially variable or tracker loans)

• Savings accounts and cash ISAs

• Credit cards and personal loans

• Investment returns and stock market valuations

• Business borrowing and economic growth

So when rates move, they impact everyone — directly or indirectly.

Why Is the Bank Expected to Hold Rates at 4.25%?

The Bank of England has already cut rates twice in 2025, reducing them from a post-pandemic peak of 5.25% to their current level of 4.25%. But June’s decision is likely to be a pause.

Here’s why:

• Inflation remains sticky: April’s inflation was 3.4%, well above the BoE’s 2% target. Although some forecasts expect this to ease into 2026, current prices are still uncomfortably high.

• Geopolitical tensions are rising: Events like Israel’s strike on Iran and ongoing uncertainty over US tariffs are fuelling higher oil prices and volatility, which affect inflation.

• Wage growth is slowing, but still too high: Average private sector pay grew 5.1% in April, still higher than the 3% rate needed for stable 2% inflation, though easing from 5.5% in March.

• Economic growth has faltered: The UK economy contracted by 0.3% in April, adding pressure for future cuts. But the Bank is likely to wait for more data before moving again.

Market expectations currently price in a split vote among policymakers, with most analysts forecasting a 6–3 or 7–2 vote to hold.

What Happens Next? Rate Cuts Likely — But Not Yet

While no cut is expected this week, most economists believe more reductions are coming — just more slowly than many hoped.

Current Forecasts:

• Next cut expected: August 2025

• Follow-up cut: November 2025

• Rate by year-end: 3.75%

• Long-term target: 3.25%–3.5% by early 2026

This slower pace reflects caution. The Bank of England wants to avoid cutting too quickly — especially while inflation and global risks remain elevated.

What Does This Mean for You?

Mortgage Holders:

If you’re on a tracker or variable rate mortgage, your repayments will remain stable this month. But relief may come later in the summer if cuts go ahead.

Fixed-rate mortgages already factor in expectations of future rate changes, so deals have become slightly more competitive — but they may not fall sharply until the BoE acts again.

✅ Tip: Now is a great time to review your mortgage deal with an independent mortgage adviser. Even small rate differences can save thousands over a 2–5 year period.

Savers:

Savers have enjoyed stronger returns over the last two years, with many easy-access accounts paying 4%+. But as rates fall, banks will likely lower interest offers.

✅ Tip: Lock in a fixed-rate savings product now if you want to protect returns — but beware of tying up funds if you need flexibility.

Investors:

Markets tend to rise when rates fall, especially in sectors sensitive to borrowing costs (e.g., property, tech). But continued inflation and geopolitical risk could limit upside.

✅ Tip: Stay diversified and focus on long-term goals, not short-term rate moves.

Still Confused? You’re Not Alone

Searches for “what happens when interest rates are cut” have risen by 5,000% in the last year. Many Brits still feel unsure about:

• How rates affect mortgages

• Whether now is a good time to buy or remortgage

• What happens to pensions or ISAs when rates move

That’s exactly why professional, independent advice matters more than ever. At Mather & Murray Financial, we guide clients across Wiltshire and the UK through these changes with clarity and confidence.

✅ What Should You Do Now?

Whether you’re a homeowner, retiree, investor or just trying to make your savings work harder — now is a great time to review your position.

We recommend:

• Reviewing your mortgage rate — and locking in better deals if possible

• Checking your savings strategy — are you getting the best returns?

• Reassessing your investment risk if interest rates fall further

• Speaking to an adviser to plan for inflation and protect your financial goals

Let’s Talk

Want help navigating the next move from the Bank of England?

Call us: 01793 261626
Email: Contact us here
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We’re here to help you make confident, informed decisions about your money — whatever the Bank of England decides next.