The Bank of England has held interest rates at 3.75%, maintaining the lowest level since February 2023.
The Monetary Policy Committee’s decision was widely anticipated by economists, following a cut from 4% in December in response to rising unemployment and weak economic growth.
The vote at this week’s meeting was tighter than expected, with four members favouring a 0.25 percentage point reduction to 3.5%. Despite this, the Committee opted to maintain the base rate at its current level, signalling a cautious approach to monetary policy.
Paresh Raja, CEO of Market Financial Solutions, said: “Given the historic lows we saw between 2008 and 2022, it's understandable that there remain loud calls for the base rate to fall further and further. But a mindset shift is perhaps required - the Bank of England is not going to rush to cut the base rate, and when we zoom out and look at the last three or four decades, we see that the cost of borrowing today is highly competitive. Positively, we are seeing greater pragmatism, with brokers and borrowers having adapted well to the rates on offer across the mortgage market, aided by the fact that these rates have been largely stable for more than a year.”
He added: “The market is in a strong position. The data suggests that transactional activity is still somewhat subdued, but prices are holding firm and we're certainly seeing healthy levels of demand among buyers and investors across the country. Base rate movements will always be influential, but should not overshadow broader market conditions, nor the need for lenders to double down on supporting clients to get deals done rather than waiting for the Bank of England's policymaking to shift.”
Tim Parkes, CEO of RAW Capital Partners, noted: “Having done so just before Christmas, a second consecutive base rate cut was always very unlikely; it would have been at odds with how the Bank of England has approached the challenge of reducing borrowing costs over the past two years. Slow and steady seems to be the unofficial motto, especially with inflation remaining sticky. That said, it is expected that the base rate will fall further in 2026, and conditions have improved for UK borrowers.”
He added: “The opening five weeks of the year have, from our perspective, been far busier and more positive than the same period in 2025. There is greater confidence among buyers, and with rates having fallen in the past 12 months, demand seems higher. We are also now well into Labour’s second year in power, which has meant a little less uncertainty around policy direction and potential reform. As a lender, the focus is on removing friction from the finance process for brokers and borrowers so we can ensure this uptick in confidence and calming of conditions translates into market activity, which we expect to see in the weeks ahead.”
Ben Thompson, director of home moving strategy at Mortgage Advice Bureau, said: “The Bank of England has opted for the safety of the sidelines with today’s rate hold. Despite inflation moving in the right direction, the MPC clearly isn’t ready to hit the accelerator on further rate cuts yet. That said, we still hope for a couple more cuts this year before we get close to some sort of new equilibrium.”
He added: “Since lenders will have already priced in this latest hold, the deals you see on the shelves today are likely as good as they’re going to get for a little while. Arguably, the smart move right now isn't trying to wait out the market for a perfect moment that might not come: it’s about finding a deal that actually fits your life and your budget. This is where an expert adviser really comes into their own. They do all the heavy lifting for you, looking past the headline rates to find a deal that matches your specific needs.”
Simon Gammon, Managing Partner, Knight Frank Finance, said: “The Bank holding rates was widely expected, but the fact that four of the nine members of the Monetary Policy Committee voted to cut is a positive sign. Strong economic figures released over the past fortnight had prompted many of the larger lenders to raise mortgage rates in recent days, but this decision should reinforce a period of pricing stability. The best fixed rates have not moved higher and still sit at around 3.5%, but there has been considerable repricing across the middle of the market.
"Rates are already low enough to support a gradual recovery in activity, with borrowers broadly comfortable at current levels. That said, the pace is likely to remain slow and steady, particularly given the high level of homes currently for sale, which should limit upward pressure on prices and keep any renewed exuberance in the market in check.”
Nathan Emerson, CEO of Propertymark, said, “Today’s decision to hold interest rates reflects the Bank of England’s cautious approach in the face of ongoing economic uncertainty. While we would ultimately welcome lower borrowing costs, stability at this stage gives buyers and sellers clarity about the cost of borrowing and allows the market to continue adapting. For those planning moves, knowing that many mortgage products are unlikely to change in the immediate term can provide space to make informed decisions about house purchases or remortgaging.”
Guy Gittins, CEO of Foxtons, commented, “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.”
Jonathan Samuels, CEO of specialist lender, Octane Capital, commented, “No news is good news in the grand scheme of things, and today’s decision to hold the base rate provides welcome consistency for both lenders and borrowers, particularly given the fact that inflation climbed in December and remains higher than the Bank of England’s two percent target."
"With this considered, a static base rate should provide lenders with the confidence to maintain competitive product ranges and pricing, whilst it also allows borrowers to plan with greater certainty. This will create a supportive environment for buyers and investors alike, helping to sustain activity and confidence across the property market.”
Marc von Grundherr, Director of Benham and Reeves, said, “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.”
