The Bank of England has voted to keep interest rates on hold at 3.75% following today’s Monetary Policy Committee (MPC) meeting.
The decision leaves borrowing costs unchanged as policymakers balance rising inflation – which increased to 3.4% in December for the first time in five months – against conditions in the wider economy.
Despite the uptick in inflation, there is growing speculation that the MPC could cut rates in March, and more likely in April, if price pressures continue to ease.
Industry reaction:
Simon Capp, head of residential sales at British Land: “2026 has started with an optimistic outlook given the rate cuts back in autumn. While a rate hold by the Bank of England was expected today, further cuts would of course be welcome in assisting buyer mobility against a challenging landscape.
“Despite this, product rates have continued to taper downwards over recent months, with lenders bringing a broader range of products to market including for first-time buyers and increased loan to value mortgages. In the London new build market, build-complete developments are seeing the strongest sales traction with the predominant buyer demographic being owner-occupiers seeking long term ownership.”
Guy Gittins, CEO of Foxtons: “Today’s decision to hold the base rate is unlikely to disrupt a property market that has, once again, started the year positively.
“With further rate cuts anticipated in 2026, buyer confidence remains high and we’ve seen the expected seasonal uplift in enquiries, viewings booked and offers being made. We anticipate this positive momentum from buyers and sellers will be sustained, creating a strong platform for the year ahead.”
Richard Merrett, MD, Alexander Hall: “Today’s decision to hold the base rate is unlikely to dampen the market momentum that has been building in recent months, and we’ve already seen a noticeable increase in activity following the cut in December, with buyers hitting the ground running in the new year with a renewed sense of confidence.
“This confidence has been mirrored by lenders, who continue to offer greater product choice and more flexible terms, particularly when it comes to loan-to-income multiples. As a result, the average homebuyer is now around £1,000 better off each year when it comes to the cost of their mortgage repayments when compared to just 12 months ago.”
Verona Frankish, CEO of Yopa: “While today’s decision to hold interest rates may have disappointed those homebuyers hoping for further reductions to mortgage rates, it is unlikely to dampen market activity, with many buyers remaining keen to progress their plans this year having gained confidence from stabilising interest rates over the course of the last year.”
Damien Jefferies, founder of Jefferies London: “Today’s decision to hold the base rate bolsters stability for international and high-net-worth buyers who are actively assessing opportunities in the UK market, with consistency in monetary policy helping to reinforce confidence and predictability when allocating capital across global property markets.
“With borrowing costs remaining broadly stable, the UK continues to present an attractive proposition and this should support continued cross-border investment and enables buyers to plan acquisitions with greater certainty over the months ahead.”
Marc von Grundherr, director of Benham and Reeves: “The housing market has continued to demonstrate strong levels of activity so far this year, with the December rate cut helping to put homebuyers firmly on the front foot heading into 2026.
“As a result, enquiry levels, viewings, and transaction volumes have remained robust, underpinned by improving confidence and more stable economic conditions, with today’s decision to hold the base rate unlikely to rock the boat.”
Sarah Thompson, group financial services director, Mortgage Scout, part of LRG: “The decision to hold the base rate comes as no real surprise and reflects a period of growing stability rather than uncertainty in the mortgage market. While inflation crept up slightly at the end of last year, it is still expected to fall back towards the Bank of England’s target later in 2026, which keeps the door open for further rate cuts this year.
“Mortgage rates remain broadly stable. Where we have seen small increases from some lenders, this appears to be linked to stronger application volumes rather than a shift in economic outlook. Confidence in the sales market has improved at the start of the year, with recent house price data showing modest growth and transaction activity picking up after a quieter end to 2025. As a result, some lenders seem to be making marginal pricing adjustments to help manage volumes and protect service levels, rather than reacting to inflation or base rate expectations.
“The more meaningful shift is in affordability. Lenders are becoming increasingly flexible, with income multiples of 6, 6.5 and in some cases 7 times income now achievable depending on circumstances. Combined with steady pay growth and more measured house price increases, this is giving borrowers greater headroom and more confidence to move or refinance.
“With a large number of homeowners coming to the end of fixed-rate deals this year, we are also seeing more people proactively exploring options rather than staying with their existing lender. Remortgaging volumes are expected to grow strongly this year, and those who take the time to review their options will tend to find better value and greater flexibility than they expect. This is why advice really matters.”
This article is being updated.
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