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BoE Interest Rate Decision: How it Affects Your Savings, Mortgage, Pension and More
By Boring Money
19 Mar, 2026
The Bank of England (BoE) has kept the base rate at 3.75%. We explain what it all means for your money, whether you're hunting for the best savings rate, due for a remortgage, or weighing up your retirement options.
📉 What's happening with interest rates?
In March, members of the Bank's Monetary Policy Committee (MPC) voted to keep the rate at 3.75%.
Bank of England base rate, 2022 - present
The Bank's base rate is the interest
rate it charges banks and lenders when they borrow money. It’s essentially the UK’s benchmark borrowing cost, and it influences everything from mortgage rates to savings accounts.It's also the Bank’s main tool for controlling inflation
, which it aims to keep at a target of 2%.When inflation is high - meaning prices are rising too quickly - the Bank usually raises the base rate to encourage saving and reduce spending, which helps cool things down. When inflation is low or the economy is weak, the Bank may cut the base rate to stimulate borrowing and spending, giving growth a boost.
⬇️ What's happening with inflation?
UK inflation fell to 3% in January 2026, down from 3.4% in December 2025, but still a long way from the Bank of England's 2% target. The next reading is due on 25 March, and had been expected to fall closer to the central bank’s target. However, the US and Israeli attacks on Iran have lifted oil and gas prices, which is expected to have a meaningful impact on inflation. The actual impact will depend on how long the Straits of Hormuz are closed and energy prices are disrupted. Against this backdrop, central banks across the world are choosing to wait and see.
The crisis will affect different parts of the economy in different ways.
💰 Savings: Clock is ticking on competitive rates
It's been good news for savers in recent years, having enjoyed competitive returns with easy-access and fixed-term savings products paying as much as 5%+. This had started to change, but as interest rate expectations have ticked higher, banks have started gradually to lift rates once again
Banks and building societies tend to align their cash savings products with the base rate, although they’re often a bit slower to react when there are changes (especially when it suits them).
Evidently, the usual advice is to shop around and make sure you're getting the best rate you can.
Average savings rates had been drifting lower since peaking in the Autumn of 2023, with many expecting the best deals to vanish in line with an improving inflation outlook. Now, there are more savings rate rises than reductions* as interest rate expectations shift rapidly.
Savers with money languishing in an account paying dismal rates should consider switching to a more competitive option to ensure their cash is working as hard as possible, particularly with the prospect of inflation ticking up once again. High inflation steadily erodes the value of cash if interest earned isn’t compensating, making it essential to shop around for the best deal.
🏡 Mortgages
For many homeowners and buyers, the Bank's decision to keep the base rate to 3.75% is disappointing. Many had been hoping for cuts, and better deals have started to disappear from the market.
📉 Tracker mortgages
Tracker rates have been gradually closing the gap on fixed rate options, but are still behind the best of the fixes. With rate cuts off the table until the crisis is over, more borrowers may see fixed rates as a better option.
Trackers have some advantages. They are also more likely to be free of any early repayment charge which gives added flexibility. However, there’s no guarantee that rates will continue to drop, and so borrowers need to have some ability to cope with rising payments if rates take a turn.
🌀 Variable rate mortgages
Standard variable rate (SVR) mortgages aren’t directly tied to the base rate, but most lenders follow the Bank’s lead. Around 600,000 homeowners in the UK have an SVR deal, and the current average rate is 7.45%.[6] If the base rate is cut later in the year, this should be reflected in lower variable rates - just bear in mind that SVRs are typically higher than most fixed deals, and lenders can be notoriously sluggish about passing on cuts.
🔒 Fixed rate mortgages
Until recently, fixed rates had come down significantly and there was a wealth of sub-4% options. However, these have gradually been withdrawn as inflation and interest rate expectations have moved.
Even though the base rate hasn’t moved, mortgage rates have crept higher in recent weeks. Swap rates, which reflect where markets think borrowing costs are heading and help determine the pricing of home loans, have risen again. Their direction from here will influenced by how the Iran conflict evolves.
“Borrowers approaching the end of a fixed rate mortgage may benefit from locking in a new deal early. Many lenders allow mortgage offers to remain valid for up to six months, giving households the option to secure a rate now while retaining the flexibility to switch if a better deal emerges.
👵 Pensions & annuities: Rates still at record highs
Higher interest rates over the past few years have helped push annuity rates to their highest levels in over a decade. That’s been a rare slice of good news for retirees looking to lock in a guaranteed income for life. Annuity rates are likely to remain high for the time being.
Interest in annuities is likely to remain strong, particularly given the anticipated changes to [Inheritance Tax] in 2027, which may prompt more people to consider annuities as part of their retirement planning.
Best annuity rates, December 2025
Annuity type | Age 55 | Age 60 | Age 65 | Age 65 | Age 70 | Age 75 |
Single life, level, no guarantee | £6,476 | £6,856 | £7,724 | £8,205 | £8,499 | £9,671 |
Single life, level, 5 year guarantee | £6,468 | £6,844 | £7,667 | £8,145 | £8,390 | £9,425 |
Single life, RPI, 5 year guarantee | £4,082 | £4,460 | £5,359 | £5,925 | £6,123 | £7,246 |
Single life, 3% escalation, 5 year guarantee | £4,456 | £4,832 | £5,745 | £6,259 | £6,538 | £7,642 |
Joint life 50%, level, no guarantee | £6,107 | £6,549 | £7,155 | £7,509 | £7,851 | £8,729 |
Joint life 50%, 3% escalation, no guarantee | £4,126 | £4,556 | £5,141 | £5,620 | £5,955 | £6,921 |
Source: Retirement Line, Hargreaves Lansdown.
If you're approaching retirement and considering an annuity, it would be wise to shop around and start getting quotes well in advance. This will give you the best chance of securing the best possible rate on your retirement savings.
It's also worth remembering that annuities aren't your only option and that you can even opt to blend one with a drawdown strategy to maximise your income:
Annuity rates remain comparatively strong, supported by the recent rise in gilt yields as investors sell government bonds in response to higher inflation risk. Although gilts are usually seen as a safe haven, inflationary shocks tend to push yields higher rather than lower. That means annuity pricing can move quickly, and retirees approaching a decision point may want to weigh the benefit of today’s strong rates against the flexibility of waiting.
If you're considering purchasing an annuity, contact a professional annuity broker or financial adviser before committing yourself to anything. They can help you filter options best suited to your individual circumstances.
🎯 The bottom line
Here are the key takeaways of what you need to know about your mortgage, savings, and pension pot in light of the Bank's decision:
🤔 So what should you do?
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[1] House of Commons, July 2024
[2] Office for National Statistics, September 2025
[3] Deutsche Bank UK, September 2025
[4] MHA, August 2025
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