Base rate holds – here’s the good news for you...
At noon on the 5 of February, the Bank of England announced they would be keeping the base rate at 3.75%. Back in December 2025, the base rate was cut from 4% to 3.75%. So the message is clear: if this trajectory holds, we could well see gradual cuts later in the year.
Inflation is likely to fall back to our 2% target later this spring, a bit quicker than previously forecast. But we need to be sure that inflation will fall to 2% and stay there, so we have held rates today. If the economy evolves as we expect, there should be scope for some further cuts to Bank Rate this year.
Now, a 'hold' announcement might feel like an anticlimax when everyone's hoping for a cut. But actually, it doesn't change the most important thing happening in mortgages right now: lender confidence is improving. Lenders have been warming to the market for months already, in the expectation that inflation will come down.
Will the base rate fall later this year?
As borrowing gets easier, more buyers get their plans off the ground.
If you want to use that momentum to sell, list with Foxtons as your sole agent by 31 March 2026 and collect 20,000 Avios once your sale completes.*
Start your journey here.
Almost certainly, yes. The Bank's been fairly transparent that cuts could follow if inflation stays on track (Source). Experienced buyers know that the base rate is only one part of the picture. The base rate is set by the Bank. Mortgage rates are set by lenders. Lenders compete for good borrowers, so if they reckon the market’s improving, they’ll likely work hard to get ahead of the pack.
Across the whole of 2025 and into the early part of this year, lenders have been releasing products that fit a wider range of budgets. They are also relaxing their loan to income multiples. This is the amount a lender is willing to let you borrow based on your salary. That number is shifting up, so your income can take you further. It gives you a higher borrowing limit, which means you can look at homes that previously sat just out of reach (Source: BBC).
There are opportunities across the board – whether you’re a first time buyer, home mover or buy-to-let investor. Sentiment is rising, as Lloyds Bank says, "This environment of falling interest rates, easing inflation, and stronger real wage growth should underpin confidence in the housing market" (Source). We've had a hugely active early 2026 market so far, and we see plenty of buyers using what's available today to fit their budget and timeline – no need to wait for a specific base rate to land.
* Terms and Conditions apply.
What this means for your buying power
The reality of buying a home is that it's never about perfect timing. A 0.25% base rate cut might sound great, but the real gains come from locking in the best suited mortgage product and having the breathing room to complete on your own schedule. Holding out for the 'perfect' base rate often just means missing the opportunity sitting right in front of you.
A quarter point change in the base rate by itself won’t deliver the big monthly savings people expect. That happens when there’s a dip in mortgage interest rates. As lender confidence is improving, the products coming to market could offer exactly that.
Here is what a 0.25 percent change in your interest rate can look like.
The Impact of a 0.25% Interest Rate Drop
See How Much You Could Save Monthly
Based on a 30-year repayment mortgage term
What the experts say
“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.”
Guy Gittins
Foxtons CEO
“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.
This confidence has been mirrored by lenders, who continue to offer greater product choice and more flexible terms, particularly when it comes to loan-to-income multiples. As a result, the average homebuyer is now around £1,000 better off each year when it comes to the cost of their mortgage repayments when compared to just 12 months ago.”
Richard Merrett
Managing Director at Alexander Hall
What to do next
There are two simple ways to get started:
1. Find your next property: Sign up to My Foxtons to tell us what you're looking for – we'll let you know the moment we find it. And if you're selling too, book a valuation to see what your current property could achieve in today's market.
2. Chat with a mortgage expert: Speak with an Alexander Hall adviser today for free expert guidance and access to the most competitive rates on the market.
Key terms you'll see in mortgage news
Source: This article has been reviewed and edited by Foxtons Sales department. The information has all been carefully reviewed to ensure you have the most reliable insight on a complex market, exactly when you need it. If you have any questions about the article, ask a Foxtons expert.
