🏦 The economy: the Bank holds rates again, with one eye on energy
The big set-piece of the week landed on Thursday, when the Bank of England held the base rate at 3.75% for another month. The base rate is the rate the Bank sets, and it influences almost every other rate in the economy, from mortgages to savings. It has now sat at 3.75% all year.
The decision itself was widely expected, but the vote tells the more interesting story. The Bank’s rate-setting committee split 7 to 2, with two members pushing to raise the rate to 4% rather than hold. So the pressure on the committee right now is towards higher rates, not lower ones, the mirror image of where we were heading at the start of the year.
What’s pulling in each direction:
- Inflation (how fast prices are rising) was 2.8% in May, comfortably down from 3.3% in March and not far off the Bank’s 2% target
- But the Bank expects inflation to climb back to a little over 3% later this year as higher energy costs feed through, which is what’s keeping a rate cut off the table for now
- Energy prices have eased over the past week or so as tensions in the Middle East cooled, but they’re still higher than before the conflict, and the Bank is wary they could yet bounce around
Governor Andrew Bailey’s message was, in effect, patience: the Bank is content to hold while it waits to see whether higher energy costs work their way out of the system or start to stick. The next decision is on Thursday 30 July.
What it means for you: nothing changes on your payment because the Bank held. If you’re on a tracker (where your rate follows the base rate up and down), there’s no movement to pass on this month. If you’re on a fix, the bigger point is the direction of travel: the cuts markets had been banking on for this year have largely been priced out, so don’t hold out for sharply cheaper deals on the assumption they’re just around the corner. Our guide to mortgage rates explains how the Bank’s decision feeds through to what you pay, and fixed vs tracker explains who’s most exposed.
🏠 The housing market: a buyers’ market as asking prices slip
The headline figure this week came from Rightmove, which tracks what sellers are asking for. The average asking price fell 0.6% in June, a drop of about £2,113 to £376,191, the biggest June fall in 14 years. Sit that alongside the lender indices, which track what homes actually sell for, and the picture is one of a flat, gently cooling market: Halifax has the average home at around £298,806 (up 0.5% over the year), while Nationwide has annual growth slowing to 1.7%.
Why are sellers trimming? A few things are stacking up at once:
- The number of homes for sale is near a historic high, so buyers have plenty of choice and more room to negotiate
- Buyer demand was down around 10% on a year ago, with an early summer slowdown arriving sooner than usual
- Sellers who want to move are responding by pricing more keenly to stand out
What it means for you: if you’re buying, this is about as much negotiating power as the market has handed buyers in a while, especially on a home that’s been listed for a few weeks. A sensible, well-judged offer is more likely to land than it would have done a year ago. If you’re selling, the flip side is that pricing realistically from day one matters more than ever, an optimistic asking price tends to sit, then drop anyway. Our first-time buyer guide and affordability calculator help you sense-check the numbers for your own area.
📉 Mortgage rates: lenders keep trimming, with one caveat
Even with the Bank holding, lenders have carried on shaving their fixed rates, with Nationwide, HSBC, NatWest and TSB all trimming selected deals in recent weeks as they compete for business. A couple of things worth knowing:
- Average fixed rates have edged lower: the typical 2-year fix is around 5.6% and the typical 5-year fix is just behind, on the latest Moneyfacts figures, with the sharpest deals for borrowers with bigger deposits sitting lower still
- The number of mortgage deals on the market has climbed back above 7,000 (around 7,130 products), the most since March, including more choice at higher loan-to-values, which matters if you’ve a smaller deposit
Behind the scenes, the recent easing in energy prices has taken some of the heat out of the wholesale costs lenders use to price fixed deals, which is what’s given them room to cut. Here’s the honest caveat, though: that backdrop can turn quickly. With the Bank flagging upside risks to inflation and two of its members already voting for a rise, these cuts could slow or even reverse if the mood shifts, so they’re not a reason to sit on your hands.
What it means for you: if your current deal ends within the next six months, this is a good moment to start looking. You can usually line up a new deal up to six months ahead and have it ready to start the day your fix ends, which keeps you off your lender’s pricey Standard Variable Rate (SVR). If rates fall further before you complete, a good broker can usually swap you onto the better deal; if they rise, you’ve locked in. Our remortgage guide and what happens when your fixed rate ends cover the timing.
💷 Money: the energy price cap is going up in July
A bit of news beyond mortgages, and one that lands on most households. Ofgem’s energy price cap is rising by £221 (about 13.5%) to £1,862 a year for a typical household from July. The cap doesn’t limit your total bill, it caps the unit rates and standing charges, so what you actually pay still depends on how much you use, but it’s a meaningful jump heading into the second half of the year, and it’s the same energy pressure the Bank is watching on inflation.
On the brighter side, savings rates have stayed strong even as mortgage rates drift down. The best easy-access accounts are still paying around 5%, the top easy-access cash ISAs are around 4.25% and fixed cash ISAs nudge close to 4.7%. It’s also worth a reminder that this 2026/27 tax year is the last in which under-65s get the full £20,000 cash ISA allowance, from April 2027 it’s due to drop to £12,000.
What it means for you: with the energy cap going up, it’s a sensible moment to check your usage and whether a fixed energy deal beats the cap for your home. And if you’ve got savings sitting in an ordinary account earning next to nothing, shop around and use a tax-free ISA before the allowance shrinks. If you’re saving specifically for a first home, a Lifetime ISA can add a 25% government bonus on top, our Lifetime ISA guide explains how it works and the rules to watch.
🛡️ Life cover and the mortgage gap: would the home be safe?
Here’s a question worth sitting with for a moment: if the worst happened and you (or your partner) died, could whoever’s left keep the home? For a lot of households the mortgage is by far the biggest bill they have, and it doesn’t pause for grief. That’s the gap life cover is built to close.
In plain English, life insurance pays out a lump sum if you die during the term of the policy. Taken out to sit alongside a mortgage, it’s designed so that the loan can be cleared, leaving the family with a home that’s paid for rather than a debt they may not be able to carry alone. A few things people often get wrong:
- There are two main shapes. Decreasing cover falls roughly in line with a repayment mortgage as the balance comes down, and tends to be cheaper. Level cover stays the same throughout, which suits an interest-only mortgage or families who want to leave something extra on top.
- It’s usually cheaper than people expect, and the younger and healthier you are when you take it out, the lower the premium tends to be. Leaving it “until later” often costs more, not less.
- Writing the policy in trust can mean the money reaches the right people faster and can sit outside your estate for inheritance tax, a simple step that’s easy to miss when a policy is set up in a rush.
- Life cover and critical illness cover do different jobs, life cover pays out on death, critical illness pays out if you survive a serious illness. Many homeowners hold a blend of the two.
It’s the kind of cover that’s easy to set up once, file away, and never look at again, even as the mortgage shrinks, the family grows, or you move to a bigger loan. The risk is that the cover you arranged years ago no longer matches the home you’re protecting. Our guide to protecting your mortgage and family walks through how the pieces fit, and life insurance vs critical illness explains the difference between the two.
Already a homeowner? It’s worth a five-minute sense-check that your life cover still matches your mortgage and your circumstances. Debbie at DS Financial can review what you have (or don’t) and explain your options, with no pressure and no jargon. Just drop her a line. (Writing a policy in trust and inheritance tax planning sit outside mortgage advice, for those, it’s worth speaking to a solicitor or estate planner too.)
That’s your week. If anything raises a question about your own situation, just drop us a line, or have a no-pressure chat with Debbie at DS Financial.
General information, not financial advice. Figures correct at the time of writing (20 June 2026).
Sources: Bank of England (June 2026 decision & minutes), Bank of England base rate, Rightmove House Price Index (June 2026), Halifax House Price Index, Nationwide House Price Index, Ofgem energy price cap, Moneyfacts (mortgages), Moneyfacts (savings).