Today (5 February), the Bank of England’s (BoE) Monetary Policy Committee (MPC) announced that Base Rate will remain unchanged at 3.75% following its first meeting of 2026. The Committee voted 5-4 in favour of the hold, while 4 members voted in favour of a 0.25% reduction.
Throughout 2025, the Bank of England implemented four 0.25% base rate cuts, reducing the base rate from 4.75% to the current 3.75% rate, representing a significant shift in monetary policy aimed at supporting the UK economy.
The cumulative effect of four 0.25% cuts over a short period has made borrowing cheaper than it was at the beginning of 2025, but it also highlighted the importance of ongoing rate monitoring throughout the mortgage journey.
The next MPC announcement, following today’s decision, is scheduled for 19 March 2026.
Why have the MPC held rates?
The decision reflects ongoing inflationary pressures, and the MPC’s continued focus on returning inflation sustainably to its 2% target. According to the Office for National Statistics (ONS), Consumer Price Index (CPI) inflation rose to 3.4% in December 2025, up from 3.2% in November. However, the Bank of England commented during the meeting that it expects inflation to reach its 2% target this spring.
Speaking on the decision Bank of England governor, Andrey Bailey, stated:
“Overall, the risks from inflation persistence appear to have continued to reduce. I therefore see scope for some further easing of policy. This does not mean that I expect to cut Bank Rate at any particular meeting. I will go into the coming meetings asking whether a cut is justified.”
The latest inflation data showed a higher-than-expected increase in CPI, with the December figure coming in slightly above economists’ forecasts. The Bank of England has previously highlighted that persistent inflation, particularly within the services sector, could slow progress back towards its target.
The MPC has also reiterated concerns around wage growth, which remains elevated by historical standards, as well as the limited amount of economic data available so far this year. Against this backdrop, the Committee judged that maintaining current monetary policy settings was appropriate at this stage.
The Committee has emphasised that future decisions will continue to be guided by incoming economic information and its assessment of inflation risks.
What does this hold mean for mortgages?
For mortgage borrowers, today’s announcement means no immediate change as a direct result of the Base Rate decision.
- Borrowers on tracker or variable-rate mortgages linked to Base Rate will see their monthly payments remain unchanged.
- Those on fixed-rate mortgages will also see no short-term impact, with payments remaining the same until the end of their current fixed period.
Borrowers approaching the end of a 5-year fixed-rate deal may find that the available mortgage rates are considerably higher, as the base rate was considerably lower at 0.1% for the majority of 2021. In comparison, borrowers approaching the end of a 2-year fixed-rate deal may find that mortgage rates are lower, due to rates decreasing from 5.25% in the early part of 2024 to the current rate of 3.75%.
While the majority lenders have adjusted pricing in anticipation of the Bank of England’s latest decision, mortgage rates continue to be influenced by a range of factors, including market conditions, individual borrower circumstances, and global fiscal policy.
The Bank of England has not provided guidance on the timing of any future interest rate changes, and borrowers should be aware that due to the current domestic and foreign economic landscape future changes to base rate are difficult to predict.
As a result, reviewing mortgage arrangements ahead of time and understanding the options available can be an important step for those planning a remortgage or home move.
How can Cooper Associates Mortgages help?
At Cooper Associates Mortgages, we continuously monitor interest rates and always aim to move a client to a better rate should one become available to them.
Once a product has been selected, we continue to monitor rates on your behalf. If a lower rate becomes available between offer and up to two weeks before completion, we will look to move you onto the lower rate wherever possible, ensuring you benefit from the most competitive option available at the time of completion.
If you are unsure how the current interest rate environment may affect your mortgage, speaking with one of our expert mortgage advisers can help you understand your options, by reviewing your individual circumstances, explaining the available products, and supporting you in making informed decisions based on your needs and priorities.
Get in touch today to discover how our team can help you secure the right product for you.
