The base rate had been expected to rise by 0.25 of a percentage point, which would have put more pressure on borrowers already struggling from the impact of 14 consecutive increases.
Here, Which? explains what the steadying of the base rate means for your personal finances.
September's base rate decision
The Monetary Policy Committee (MPC) has voted by a slim majority of 5-4 to keep the base rate at 5.25%.
In doing so, it has brought an end to 14 consecutive hikes.
During that time, the base rate has gone from the historic low of 0.1% to 5.25% as the Bank attempted to put a lid on runaway inflation.
The base rate influences the cost of borrowing with a mortgage, loan, or credit card. So when it goes up, interest bills also tend to rise.
Find out more:How does the base rate freeze impact my mortgage?
In welcome news for those on tracker mortgages, their bill will not rise. Trackers are usually linked to the base rate, so any rise - or fall - impacts the monthly bill.
Now, we shall see if lenders will continue with the downward trend and offer cheaper rates.
Charlotte Local, Legal Director at conveyancing firm Enact, said: 'All eyes will be on mortgage rates over the coming days to see whether lenders had already baked in a rise in product rates in anticipation of the base rate being confirmed. If any have, we should expect to see some rates fall.'
The graph shows the relationship between base rate changes and mortgage rates for two- and five-year fixes, using data from Moneyfacts.
Find out more:'Households still under pressure'
'However, Which? warned this week that around half a million homeowners are set to come off their fixed-term deals over the Christmas period, meaning households already under pressure due to the cost of living crisis could see their monthly repayments increase by hundreds of pounds.'
Find out more:What if I can't afford my mortgage?
What does the base rate freeze mean for savings?
In theory, the base rate freeze should see interest rates on savings accounts remain steady. However, providers could start to factor in potential falls in the future and start lowering rates.
Excluding accounts with limited withdrawals or other restrictions, the best instant-access savings rate is currently 5.01% AER, offered by Kent Reliance.
Find out more:Will the base rate fall in the future?
If inflation continues to cool, there is hope the base rate can soon be lowered.
But officials have still left the door open to further rises in the future, promising to 'take the decisions necessary' to return inflation to the target of 2% (it's currently 6.7%).
We therefore may not yet be at a peak, and this could only be a temporary pause in the base rate.
Chancellor Jeremy Hunt said: 'Now is the time to see the job through. We are on track to halve inflation this year and sticking to our plan is the only way to bring interest and mortgage rates down.'
The base rate will next be reviewed on Thursday 2 November.
source https://www.which.co.uk/news/article/bank-of-england-freezes-base-rate-at-5.25-acXon5Z5Wwdn