Last year saw the Bank of England take a slow and steady approach to dropping the base rate. In December 2025, the Bank decided to cut the base rate from 4.00% to 3.75%. This left people speculating what the Bank of England’s Monetary Policy Committee (MPC) would vote for at their first base rate meeting of 2026 on February 5.
It voted to hold the base rate at 3.75% at five votes to four, suggesting the decision was a close call. With inflation dropping to 3% from 3.4% in January 2026 and getting closer to the 2% target, it is likely that the Bank is still taking a cautious approach to lowering the base rate to avoid dropping it too soon.
Below, our team looks at what this base rate hold means, when it might be cut again, and what it means for people wanting to get on or progress up the property ladder.
What The Base Rate Hold Means
The Bank of England’s base rate is the rate it charges lenders to borrow money so they can offer services, such as mortgages, to customers. It can have a knock-on effect on the interest rates banks offer for fixed-rate mortgage deals and can impact those on a variable, tracker mortgage.
Members of the Bank’s MPC meet eight times a year to vote whether the base rate should be held, dropped, or raised. When voting, they consider what impact changing the base rate may have on inflation.
Inflation dropped at the start of the year to 3%, which is a step in the right direction towards the 2% target. Holding the base rate in February rather than dropping it again is likely the Bank erring on the side of caution and not wanting to spike inflation again. Still, it’s a positive sign for people looking to buy a property this year.
Our Base Rate Predictions for 2026
The close call on the MPC’s votes of five versus four to hold or drop the base rate suggests that at the next meeting on March 19, we might see another cut. Looking ahead to the rest of the year, our experts predict that the Bank will continue its cautious approach to lowering the base rate, and we expect it to reach at least 3.25% by the end of 2026.
This downward trend could benefit homebuyers or people looking to switch mortgage deals in the near future. It’s expected that lending rates will continue to decrease alongside this and into 2027.
What This Means For Homebuyers
So, what does our predicted continual lowering of the base rate mean for homebuyers or homeowners who are coming to the end of their fixed term? Well, it’s safe to say it will eventually feed into the mortgage rates lenders offer, which will mean lower fixed rates for those remortgaging and reduced monthly repayments for those on tracker rate mortgages.
However, the base rate isn’t the only factor that influences mortgage rates. Inflation, supply and demand, the global economy, and swap rates all have a big impact on what rates lenders offer.
If mortgage rates go down as anticipated, people’s affordability will improve, potentially allowing more people to get on the property ladder. This might cause house prices to increase, but that isn’t guaranteed. A drop in inflation is also a good sign, as it means the cost of running a home should reduce in line with it.
With the base rate lowering, it can be easy for prospective buyers to think they have to delay applying for a mortgage to see if rates drop or whether to get on with things as they are. So much goes into the mortgage rate you are offered, so waiting to see if rates drop further may not be the best choice.
Your earnings, monthly spending commitments, and deposit can affect the mortgage rate you are offered. The house buying process can also take months from having an offer accepted to completion, during which time you can switch to a lower rate if one becomes available on your mortgage deal. So, don’t think you have to wait to start the house-buying process.
Watch This Space
Nobody can predict the future, but the ongoing lowering of the base rate is good news for people on the property ladder and those looking to buy their first home. If you want to be sure that you’re getting the best mortgage rates for your individual circumstances, get in touch with our professional Doctors Mortgages team, and we can talk you through your options.
