The Bank of England has maintained Bank Rate at 3.75%, but the decision does not necessarily signal a period of stable or cheaper borrowing.
At its September meeting, the Monetary Policy Committee voted 6–3 in favour of holding rates. Significantly, the remaining three members voted for an increase to 4%, highlighting continuing concerns around inflation.
UK CPI inflation reached 3.1% in August, with higher energy prices creating further uncertainty about the path of interest rates. The Bank has also warned that inflation could rise over the coming quarters. Bank of England, September 2026
A base-rate hold does not guarantee cheaper borrowing
Property investors and developers should avoid assuming that a stable Bank Rate means mortgage, bridging or development-finance pricing will remain unchanged.
Fixed borrowing rates are influenced by several factors, including:
- Swap rates and lenders’ own funding costs
- Inflation expectations
- Competition between lenders
- The strength and experience of the borrower
- Loan-to-value and loan-to-cost
- The property, location and proposed exit strategy
Rightmove reported that the average two-year fixed residential mortgage rate increased from 5.09% to 5.29% during the month, despite Bank Rate remaining unchanged. Rightmove House Price Index, September 2026
The specialist market operates differently from standard residential lending, but it is exposed to many of the same economic pressures. Some lenders may reprice, reduce leverage or become more selective without waiting for the Bank of England to change the headline rate.
Certainty may currently be more valuable than waiting
Borrowers often delay an application because they expect rates to fall. In the current market, however, there is no guarantee that waiting will produce a better outcome.
For a developer, the cost of delaying a purchase or refinancing can outweigh a modest future reduction in the interest rate. Delay may result in:
- Additional interest with an existing lender
- Extension or default charges
- The loss of a property or development opportunity
- Increased construction costs
- Reduced time to complete a project before the exit date
The right decision should therefore be based on the complete commercial position, rather than the interest rate alone.
Structure matters more than the headline rate
A competitively priced facility can still be unsuitable if it does not provide enough money at completion, restricts drawdowns or relies on unrealistic timescales.
When comparing property-finance options, borrowers should consider:
- The net amount available on day one
- How and when refurbishment or development funds are released
- Arrangement, exit, valuation and legal fees
- Minimum interest periods
- Interest calculated on the total facility or only on funds drawn
- Extension provisions
- Personal guarantees
- The lender’s ability to fund the entire project
- Whether the proposed exit remains realistic if the market changes
A slightly higher-priced facility that offers certainty, sufficient leverage and a workable exit can represent better value than a cheaper loan that leaves a funding gap.
Prepare for more than one exit
With interest rates and buyer affordability still uncertain, every transaction should be assessed against a downside scenario.
Developers should consider what happens if sales take longer, the final valuation is lower than expected or the completed property needs to be refinanced instead of sold. Investors should also check whether the projected rent supports an investment mortgage at current stress rates.
Having a credible secondary exit can significantly strengthen a funding application and reduce the risk of expensive decisions later.
Speak to Cator Wells Finance
If you are purchasing, refinancing or developing property, Cator Wells Finance can review the full transaction and identify the most appropriate funding structure across development finance, bridging, refurbishment, development exit and investment mortgages.
Contact our team before committing to a lender or agreeing a completion date. Early involvement gives us more opportunity to structure the transaction properly, anticipate lender questions and secure the right solution.
This article is for general information only and does not constitute financial advice. All funding is subject to status, valuation and lender criteria.