The Bank of England has voted to keep interest rates on hold at 3.75% following today’s Monetary Policy Committee (MPC) meeting.
Borrowing costs remain unchanged as policymakers weigh rising inflation — which increased to 3.4% in December for the first time in five months — against the wider economic outlook.
The decision was narrowly split, with the MPC voting 5–4 in favour of holding rates. Four members backed a quarter-point cut that would have reduced rates to 3.5%.
Despite the increase in inflation, the split MPC vote suggests rate cuts could follow in March, and more likely in April, if price pressures ease. Bank of England governor Andrew Bailey, who voted to hold, said he could “see scope for some further easing of policy”.
Industry reaction:
Amy Reynolds, head of sales at Antony Roberts: “The expectation was that the Monetary Policy Committee would hold rates at 3.75 per cent at this meeting, but what really matters for the property market is the tone rather than the decision itself.
“Markets are already pricing in cuts later in the year, and that shift in sentiment has fed through to mortgage pricing and buyer confidence. Even without an immediate cut, greater certainty around the direction of travel is helping buyers re-engage, particularly those who paused decisions last year.”
Jeremy Leaf, north London estate agent: “While the base rate is, of course, important for the direction of travel of housing market activity, we find on the ground that just as vital to buyers and sellers is the ‘steer’ lenders take from that decision.
“We have noticed previously that mortgage rates sometimes harden when the base rate is reduced, head south when it is unchanged – or even increase.
“Following the first rise in inflation for five months in December, it’s no surprise rates have been held this time around but it is worth noting that they are are still at their lowest level in almost three years, which is certainly helping boost buyer and seller confidence.
“We know what homeowners like least is uncertainty and if there is a sense that there is little prospect of a reduction in rates in the near future then some of the early 2026 optimism that we have witnessed in our offices is likely to fizzle out.”
Frances McDonald, director of research at Savills: “The Bank base rate hold was largely expected by markets, particularly as inflation figures remain higher than expected.
“While interest rates are still expected to continue to gradually decline this year, weaker economic growth will continue to constrain buyer budgets and confidence. As a result, we expect house price growth to remain subdued at +2% in 2026, before stronger levels of growth take hold from next year and beyond.
“Early data from TwentyCi backs this up – indicating that net agreed sales across the UK were -5% below the same month last year, signalling a more cautious start to 2026.
“For the prime markets, which are typically less influenced by mortgage costs, we are expecting more stability for both prices and activity this year, but it will take some time for them to fully absorb recent tax changes.”
Tony Gambrill, regional sales director at Chestertons: “Buyer activity has strengthened since the beginning of the year, with house hunters continuing their search despite some lenders recently raising mortgage rates. While some buyers would have welcomed a cut in interest rates today, the majority will remain undeterred and proceed with their property search regardless.”
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.”
Oliver Prior, managing director at Auction House: “A back-to-back cut was never really on the cards. The last time we had sequential base rate cuts was following 2008’s financial crisis, when the market desperately needed stabilising. Sticky inflation of 3.4%, which remains well above the Bank of England’s target rate of 2%, means it’s no great surprise that the MPC has chosen to hold fast with the base rate.
“While it would be easy to be gloomy about this announcement, there’s still room for optimism. Confidence in the market will continue to build as a consequence of this base rate stability. Certainty and predictability underpin market confidence. The greater the confidence, the greater transactional activity will likely be, which will deliver market growth.
“Domestic and global factors will play a part over the next 12 months. Nevertheless, we still anticipate that further reductions will take place over 2026. These cuts will be measured and cautious, giving the property market a solid and dependable footing upon which to grow.”
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.”
Jason Tebb, president of OnTheMarket: “As expected, the Bank of England held interest rates at 3.75%. With inflation rising to 3.4 per cent in the year to December, caution prevailed this time around with the rate setters adopting a ‘wait and see’ approach, although the vote was split with four of the nine members voting for a 0.25 percentage point reduction.
While this will be disappointing for those on variable-rate mortgages, borrowers have benefited from six rate cuts in the past 18 months, giving much-needed impetus to the market. Rate cuts send a positive message, helping ease affordability and give encouragement to buyers and sellers alike, and this close vote will enable buyers to plan ahead with some confidence.
Although the year has got off to a good start on the mortgage front with a number of lenders reducing their rates, there has been some upwards pricing in recent days on the back of higher swap rates and expectations that the pace of future rate cuts may be slower. That said, mortgage rates are more palatable than they have been in a long while and any further rate reductions this year will give the market an additional boost. With the uncertainty surrounding the Budget having lifted, most of the agents we have spoken to report a better start to this year than Q1 2025.”
Matt Smith, Rightmove’s mortgage commentator: “Today’s Bank Rate hold was widely expected given underlying inflation and wage growth data, and it’s currently likely we’ll see the next Bank Rate cut in June. Average mortgage rates have remained pretty steady over the last couple of weeks despite the underlying cost of funding mortgages becoming more expensive to lenders. This is why some lenders have increased rates slightly over the last few days, but we’re seeing lenders try to remain as competitive as they can at a busy home-moving time of year.
“We’re still seeing some of the cheapest rates around since before the mini-Budget. We’re seeing an encouraging start to the year for home-moving activity, with many home-buyers taking advantage of lower mortgage rates and stable house prices to make their move.”
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.”