UK interest rates, inflation, mortgage and savings rates, in plain English

Often called the base rate. It is the rate the Bank of England pays banks on the money they hold with it, and it anchors what lenders charge and what savers earn. It has been 3.75% since 18 December 2025, when it was cut from 4%.

What it affects. Tracker mortgages follow it directly. Fixed-rate deals are priced on where lenders think rates are heading over the next two to five years, which is why fixed-rate quotes can move before the Bank does. Savings rates tend to follow it, more slowly.

Next decision. Thursday 5 November 2026, 12 noon. The nine members of the Bank’s Monetary Policy Committee vote eight times a year.

Source: Bank of England. Checked 2 October 2026.

How much more a typical basket of goods and services costs than it did a year ago, measured by the Office for National Statistics as the Consumer Prices Index. In the year to August 2026 prices rose 3.1%, up from 2.9% the month before. The Bank of England’s target is 2%.

What it affects. When inflation is above target, the Bank is less likely to cut interest rates. It also decides what savings are worth: money earning less than inflation buys less each year.

Next figure. Wednesday 21 October 2026, 7am.

Source: Office for National Statistics, CPI annual rate. Latest month: August 2026.

The average rate lenders were quoting for a new fixed-rate mortgage at 75% loan to value, meaning a deposit or equity of a quarter of the home’s value. The Bank of England collects it each month. In August 2026 the two-year average was 4.92% (4.79% the month before) and the five-year average 4.78% (4.58%).

Why it moves. Lenders price a fixed deal on what they expect interest rates to do over the life of that deal, so these averages follow the market’s view of the next two to five years, not only the Bank of England’s rate today.

Source: Bank of England, quoted household interest rates. An average across lenders, not the cheapest deal.

Money already sitting in instant-access accounts was earning 1.65% on average in August 2026, on the Bank of England’s figures. New easy-access accounts were being advertised at 2.07% on average, and new one-year fixed-rate bonds at 4.04%. These averages include the low rates paid by many large banks, so the best rates on the market are higher. Comparison sites publish them for free.

Set against inflation. With inflation at 3.1%, money earning the average 1.65% is losing buying power: about £145 a year on every £10,000. The average new one-year fixed bond, at 4.04%, is about 0.9 percentage points ahead of inflation.

Source: Bank of England, effective and quoted household interest rates. Averages, not best buys.

The average pump price across the UK in the week of 28 September 2026, from the government’s weekly survey. The week before, petrol was 172.0p and diesel 195.5p.

Why it moves. The price of crude oil, the pound against the dollar (oil is priced in dollars) and fuel duty. When oil moves, the pump follows within a few weeks.

Source: Department for Energy Security and Net Zero, weekly road fuel prices.