The Bank of England has today voted to hold the Base Rate at 3.75%, which was widely expected.
But while the headline decision won’t shock anyone, the detail underneath it is far more important.
This was a close vote of 5 – 4, with four members of the Monetary Policy Committee (MPC) voting for an immediate rate cut. That tells us one thing very clearly: the next move in rates is likely to be down, and we’re now getting closer to the point where cuts become the majority view.
For borrowers, homeowners and anyone considering a mortgage in 2026, that matters.
What Was the Decision?
At its meeting ending on 4 February 2026, the MPC voted to keep Bank Rate at 3.75%.
Five members voted to hold, while four members voted to reduce the Base Rate by 0.25% to 3.50%.
A split like this is significant because it shows the committee is no longer unified around keeping rates high. Instead, the debate has shifted to how quickly rates should begin to fall again.
Why Did the Bank Hold Rates?
The Bank’s main reason for holding is simple: inflation is still above target, but easing.
CPI inflation has already fallen from 3.8% in September to 3.4% in December, and the Bank expects inflation to fall back close to the 2% target from April onwards.
That expected drop is being driven largely by falling energy costs and measures introduced in Budget 2025.
However, the MPC is still cautious. Their focus isn’t just inflation falling temporarily, it’s ensuring inflation reaches 2% and stays there sustainably.
And that is why, despite acknowledging progress, the majority felt it was too early to cut at this meeting.
What Has Changed Since the Previous Meeting?
Compared to the tone of the previous minutes, the Bank appears slightly more confident that inflation pressures are easing.
Wage growth and services inflation have continued to cool, and the Bank is increasingly pointing to “slack” building in the economy, meaning demand is weaker and the labour market is loosening.
Unemployment has now risen to just over 5%, which is another signal that the economy is slowing.
In plain English: the Bank is seeing more signs that inflation will keep drifting down, but they want more certainty before moving too quickly.
Why Was the Vote So Close?
The split vote reflects two competing fears.
Some members are still worried that inflation could prove stubborn, particularly if wage growth remains higher than the Bank is comfortable with. They believe cutting too early could risk inflation settling above target again, and that would damage credibility.
Others are now more worried about the opposite problem: that holding rates too high for too long could weaken demand further, push unemployment higher, and eventually cause inflation to fall below target.
This is why the committee is divided. The risks have changed, and the decision is no longer straightforward.
What Does This Mean for Mortgage Borrowers?
This decision won’t change mortgage rates overnight, but it does strengthen the direction of travel.
The Bank has clearly stated that rates are likely to be reduced further, and the 5 – 4 split suggests we may not be far away from a cut.
Mortgage rates are influenced by swap rates and market expectations, and lenders often move before the Bank does. That’s why fixed rates have already been improving in recent months.
The key point is this: we are now in an environment where the peak is behind us, and the market is moving toward a more stable and gradually improving mortgage landscape.
What Does This Mean for Savers?
For savers, today’s hold decision means savings rates should remain supported for now.
However, if Base Rate cuts begin later in 2026, savings rates are likely to soften too. Anyone holding significant cash may want to consider whether locking into a fixed savings product could make sense, particularly if rates begin drifting down.
Should Buyers Wait for Mortgage Rates to Fall?
This is one of the biggest questions in the market right now. And the honest answer is that waiting is risky.
Yes, mortgage rates may continue to improve, but buyers who delay often face other issues, such as losing the property they want, dealing with affordability changes, or being forced onto a lender’s SVR if their current deal ends.
In most cases, the better approach is to plan early, secure an offer if possible, and keep flexibility so you can switch if rates improve before completion.
The Outlook for 2026 and Heading Into 2027
The Bank is now openly signalling that further cuts are likely, but it has also warned that future decisions will become a “closer call.”
That suggests the Bank will cut cautiously rather than aggressively.
The minutes also highlight that market pricing expects rates to fall slightly in 2026, while many market participants believe Bank Rate could fall toward 3.25% and remain there.
My expectation is that 2026 will be defined by gradual easing and stabilisation, and by 2027 we may see a more settled mortgage environment where lenders can price more competitively again.
However, we should not expect a return to the ultra-low interest rate world of the 2010s. The Bank appears determined to avoid cutting too quickly and risking another inflation spike.
Key Takeaways (Quick Summary)
- The Bank of England has held Base Rate at 3.75%
- The vote was very close (5 – 4), signalling cuts are getting nearer
- Inflation is expected to fall back close to 2% from April
- Wage growth and services inflation are easing, but the Bank wants more evidence
- Mortgage rates may continue to gradually improve through 2026
- 2026 – 2027 is likely to be a period of stabilisation, not dramatic rate drops
Frequently Asked Questions (FAQ)
Did the Bank of England raise interest rates today?
No. The Base Rate was held at 3.75%.
Why didn’t the Bank cut rates if inflation is falling?
Because the MPC wants confidence that inflation will not only fall back to 2%, but stay there sustainably. Some members still believe wage growth and inflation expectations remain too high.
Does this mean mortgage rates will fall immediately?
Not immediately. Mortgage rates are influenced more by market expectations and swap rates than Base Rate alone. However, today’s minutes support the idea that rates could gradually improve.
Is the Bank likely to cut rates in 2026?
Yes, based on these minutes the Bank believes rates are likely to be reduced further, but timing will depend on inflation and wage data.
Should I wait until rates drop before buying a house?
Waiting can be risky. Mortgage rates may fall, but buyers often lose out through property competition, changing affordability rules, or higher costs if their current deal ends. Planning early usually puts you in a stronger position.
What does this mean for people remortgaging in 2026?
It’s positive overall. The outlook suggests the worst of rate rises is behind us, and remortgage pricing may gradually improve. But borrowers should still start early, because lender affordability checks remain strict.
Will savings rates fall soon?
Possibly later in 2026. If Base Rate cuts begin, savings rates are likely to soften as well, particularly on easy-access accounts.
What could stop rates falling?
If wage growth stays high, inflation expectations remain elevated, or global shocks push inflation higher again (for example, energy price rises or geopolitical disruption), the Bank may slow down or pause cuts.
What is a realistic Base Rate level for 2027?
The Bank and markets appear to be pointing toward a Base Rate somewhere around the 3.0% to 3.25% range, but this will depend on inflation and economic growth.
Final Thoughts
Today’s decision was expected, but the voting split is the real signal. A 5 – 4 hold is about as close as it gets, and it strongly suggests the UK is approaching the point where cuts become the majority view.
For borrowers, the outlook is improving. Inflation is easing, wage pressures are cooling, and the economy is slowing. If those trends continue, base rate cuts later in 2026 look increasingly likely, and mortgage rates should gradually follow.
If you’re buying or remortgaging this year, the key is preparation. Rates may improve, but the strongest borrowers will be the ones who plan early and stay flexible.
