The mortgage market was relaxed by the Bank of England’s decision to keep the base rate at 3.75% today, with cuts expected later in the year.
The Bank’s Monetary Policy Committee (MPC) voted 5-4 against keep the base interest rate at its current level.
The decision to maintain the base rate was because the majority of MPC members considered it too risky to cut the CPI inflation is 3.4% in December 2025, up from 3.2% in November.
Andrew Bailey, Megan Greene, Clare Lombardelli, Catherine Mann and Huw Pill voted to keep the base rate at 3.75%. Four members recommended a cut of 25 basis points, to 3.5%, namely Sarah Breeden, Swati Dhingra, Dave Ramsden and Alan Taylor.
The next decision will take place on March 19, with most analysts expecting a cut to 3.5%.
The Bank of England said: “On current evidence, bank rates are likely to be cut further. Judgments on further policy easing will come closer.”
The mortgage and real estate markets said they had expected the Bank’s decision reductions in the base interest rate were more practical later in the year.
OnTheMarket president Jason Tebb said: “As expected, the Bank of England kept rates at 3.75%. With inflation rising to 3.4% in the year to December, there was caution this time around, with rate setters taking a wait-and-see approach, although the mood was divided with four of the nine members voting in favor of a 0.25 basis point cut.”
MT Finance director Joshua Elash said: “While further cuts are expected later this year, it is not surprising that the bank rate has been kept at 3.75% this time.
“The news that UK inflation has risen in the 12 months to December 2025 has effectively ruled out the possibility of a fall in February, especially as the US Federal Reserve also voted against a fall last week.
“However, there is still a willingness to lend, and we are hopeful that absent rate increases, borrowers will continue to transact.”
Steve Cox, Chief Commercial Officer of Fleet Mortgages, said: “Today’s decision by the Bank of England to keep the bank base rate at 3.75% comes as no surprise, especially after inflation rose slightly to 3.4% last month.
“With a cut already implemented in December and the Bank keen not to move too quickly, this pause was widely expected. That said, the broader expectation is still that inflation will fall throughout the year, which could pave the way for two or possibly three cuts to the base rate in 2026, potentially taking us down to 3% by the end of the year.”
Nottingham Building Society chief lending officer Aaron Shinwell said: “With the Bank of England confirming a hold at 3.75%, mortgage interest rates remain at their lowest levels since 2022, creating real opportunities for anyone looking to buy or remortgage.
“Interest rates have already passed their peak and could gradually fall over time, which is good news for the 1.8 million borrowers expected to remortgage this year and for first-time buyers who will find a more realistic route onto the property ladder.”