The Bank of England has today voted to hold the base rate at 3.75%, leaving it unchanged following December’s reduction from 4%.
Going into today’s meeting, most market commentators expected this outcome. While inflation has fallen significantly from its recent peaks, it remains above the Bank’s 2% target and policymakers have been clear that they want to see further evidence before moving again.
The economic picture
The latest CPI figure stands at 3.4%, still some way from target. Services inflation and wage growth continue to run higher than the Bank would like, which makes cutting rates too quickly a risk.
At the same time, economic growth remains modest. Recent data shows the economy expanding only slightly, reflecting cautious consumer spending and continued pressure on household finances.
This is the balance the Bank is trying to strike, supporting growth without allowing inflation to re-accelerate.
Today’s decision suggests patience rather than urgency.
What this means for the housing market
For the property market, stability is often helpful.
Mortgage lenders have already been pricing products around the expectation of a gradual easing cycle during 2026. By holding rates steady, the Bank avoids introducing unnecessary volatility and gives both buyers and lenders a clearer short term outlook.
We are likely to continue seeing:
- Steady levels of activity from buyers who have adjusted to current affordability
- Gradual improvement in confidence compared with the uncertainty of the past two years
- A market shaped more by supply and local demand than by sudden rate movements
While borrowing costs remain higher than many became used to over the last decade, they are considerably below the highs reached during the tightening phase.
Looking ahead
The focus now turns to upcoming inflation and wage data. If price pressures continue to ease over the coming months, further reductions later in 2026 remain a possibility. If not, the Bank may choose to extend this period of stability.
For now, today’s announcement reinforces a steady and measured approach. The direction of travel appears gradual rather than abrupt, and that consistency tends to support confidence across the property market.
Periods of stability often allow buyers, sellers and investors to make decisions with greater clarity. While economic conditions remain finely balanced, the absence of surprise is, in itself, constructive.
As always, we will continue to monitor developments and assess what they mean for the property market in the months ahead.
