As the Bank of England holds steady and mortgage lenders adjust to an increasingly complex backdrop, borrowers face both risks and opportunities. Here’s what to know – and how to prepare.

The Bank of England held the base rate at 4.25% on Thursday, a widely expected move as officials continue to wait for clearer economic signals. The decision followed May’s rare three-way split, when policymakers voted across a spectrum of holding, cutting by 0.25 percentage points, and cutting by 0.5. That division captured just how mixed the current signals are – from geopolitical volatility to sticky inflation and increasingly sluggish economic data.

In mortgage markets, lenders are reacting swiftly to shifting conditions. A flurry of rate adjustments in recent weeks reflects the fierce competition to attract borrowers amid an uncertain outlook. "We're seeing a lot of jostling for position. The current trajectory for rates is sideways," says Simon Gammon, Managing Partner of Knight Frank Finance. "But there are reasons to be optimistic: many of the best deals are still below 4%, and there is scope for further falls if inflation softens."

That optimism, however, is tempered by risk. The conflict in the Middle East has rekindled fears of a spike in oil prices, a common driver of inflationary shocks. But in its annual report this week, the International Energy Agency forecast that global oil supply would outpace demand this year – even as the conflict escalates – potentially easing pressure on prices. If that proves true, it may give the Bank of England confidence to pivot towards supporting growth with rate cuts in the second half of 2025.

In the meantime, buyers face a market that is unusually competitive for June. According to Rightmove, the average asking price for newly listed homes fell 0.3% this month – an uncommon drop for the time of year. The average price now sits at £378,240, with sellers lowering expectations to secure a sale amid the highest number of available homes in over a decade.

Against this backdrop, acting early and with conviction can make all the difference, says Knight Frank Finance. "You can lock in a competitive rate now, and if a better one comes along before you complete, you can switch," Simon adds. "But if rates rise in the meantime, you're protected. That flexibility is valuable in a volatile market."

That strategy is especially relevant for first-time buyers, where competition among lenders is fiercest. In Q1 2025, the share of mortgages advanced at loan-to-value ratios above 90% hit 6.7%, the highest level since Q2 2008. This trend reflects a concerted effort by banks to win business at the entry level, often by tweaking affordability assessments or offering longer terms.

The economics of ownership are shifting fast. Rising wages and falling mortgage rates are making monthly repayments more manageable, while tight rental supply is driving up costs for tenants. With many landlords still exiting the sector, that squeeze on rental availability looks set to continue – further reinforcing the case for buying for those able to do so.

While the Bank of England remains cautious for now, market dynamics are moving ahead of policy. Rather than aiming to time the market perfectly, borrowers would do well to get their finances in place and be ready to act when the right property comes along.

If you are considering purchasing or remortgaging a home, please get in touch with one of our experienced brokers. We have relationships with over 200 lenders and we’d be happy to walk you through your options.