The Bank of England has held base rate at 3.75%, with the Monetary Policy Committee voting five to four in favour of the hold.
The bank has opted to maintain stability while assessing whether inflationary pressures will ease in the coming months, the committee said. The decision follows inflation (CPI) increasing slightly to 3.4% in December 2025, well above the 2.0% target.
Property industry reaction
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.”
Richard Merrett, managing director of 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.”
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.”
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.”
Nathan Emerson, CEO of Propertymark:
“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.”
Joe Pepper, UK CEO, PEXA:
“Today’s decision prolongs the wait for thousands of UK borrowers looking to remortgage or buy a property, especially with the recent rate hikes being seen across the industry. It also highlights a looming crisis – the more people wait for better circumstances to buy, the more the backlog grows. Eventually, when the right triggers are pulled, the flood gates will open and demand for transactions will soar. Inevitably, the system will be entirely overwhelmed because the infrastructure supporting conveyancers is not set up to handle this many transactions at once – it is struggling as it is.
“But this can be prevented. The key priority must be to support those who keep the housing system functioning. That means ensuring conveyancers are not buried under administrative backlogs without the capacity or resources to manage such heightened demand. The Future Property Transaction Group found that transaction times could be halved with the right digitalisation freeing up conveyancers to focus on tasks that need their expertise. Getting this right is essential not just to keep the housing market afloat, but to ensure it can operate efficiently and sustainably for all – more investment in the right technology cannot come soon enough.”
Paresh Raja, CEO of Market Financial Solutions:
“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.
“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:
“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.”
