Bank of England Holds Interest Rates Steady at 3.75%

The Bank of England’s Monetary Policy Committee (MPC) has decided to keep the base interest rate at 3.75%, a level not seen since February 2023. This move was widely anticipated by economists and financial markets following a rate cut from 4% in December, which was introduced amid concerns over rising unemployment and sluggish economic growth. The vote was close, with five members supporting the hold and four favouring a cut, indicating a growing inclination within the committee towards easing monetary policy sooner rather than later.

Andrew Bailey, the Bank’s governor, has indicated that further rate reductions are now “likely,” signalling a shift in the Bank’s approach to supporting the economy. This cautious stance reflects the balance the MPC is trying to strike between controlling inflation and fostering economic stability.

Implications for the Property Sector

The decision to maintain rates has been met with cautious optimism across the property finance sector. Steve Cox, Chief Commercial Officer at Fleet Mortgages, noted that buy-to-let mortgage pricing has been trending downwards during January as lenders, including Fleet, have moved early to offer competitive rates and new products such as 65% loan-to-value (LTV) options. However, Cox also warned that recent increases in swap rates mean landlords may benefit from acting sooner rather than later.

Simon Gammon, Managing Partner at Knight Frank Finance, highlighted that while the Bank’s hold was expected, the narrow vote in favour of holding rates is a positive sign. He pointed out that although some lenders had recently increased mortgage rates due to strong economic data, the Bank’s decision should help stabilise pricing. Gammon added that the best fixed mortgage rates remain around 3.5%, although there has been notable repricing in the mid-market segment.

Market Stability and Affordability

Adrian Moloney, Group Lending Distribution Director at Precise, emphasised that while many borrowers hoped for a rate cut, the current period of stability provides reassurance and allows households to plan with greater confidence. He also noted improvements in affordability, with more flexible mortgage products emerging to assist homebuyers and movers in the current market.

Nick Leeming, Chairman of Jackson-Stops, commented that the decision was unsurprising given the Bank’s cautious approach amid rising inflation, which unexpectedly increased to 3.4% in December. He described the December rate cut as part of the MPC’s careful balancing act between slow economic growth, high wages, and rising unemployment.

Jonathan Samuels, CEO of Octane Capital, described the hold as “welcome consistency” for lenders and borrowers, especially considering inflation remains above the Bank’s 2% target. Nathan Emerson, CEO of Propertymark, echoed this sentiment, stating that while lower borrowing costs would be welcomed, the current stability offers clarity for buyers and sellers, helping the market to adapt amid ongoing economic uncertainty.

What This Means for UK Landlords and Letting Agents

For landlords and letting agents, the Bank of England’s decision to hold interest rates means borrowing costs remain stable for the time being, which could help maintain current mortgage affordability levels. However, with signals pointing to possible rate cuts in the spring, there may be opportunities for reduced borrowing costs later in the year. Landlords should monitor mortgage product pricing closely, as some lenders have already adjusted rates in response to economic data and swap rate movements.

The introduction of new mortgage products with lower loan-to-value ratios may also provide more options for buy-to-let investors looking to refinance or expand their portfolios. Overall, the current environment suggests a cautious but potentially favourable outlook for borrowing in the private rented sector over the coming months.

Suggested internal link anchors

• Bank of England interest rates
• buy-to-let mortgage pricing
• loan-to-value (LTV) products
• mortgage affordability
• Monetary Policy Committee
• inflation impact on borrowing
• mortgage rate stability
• property market economic outlook
• landlord borrowing costs
• mortgage product trends

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/