Bank of England base rate kept at 3.75% for February
Quick Summary
The Bank of England base rate has been held at 3.75% for February, but market expectations are that further base rate cuts will come this year. NatWest, Nationwide and Barclays have increased the prices of some of their fixed mortgage rates, although Trinity Financial's brokers still have access to two-year fixes from 3.5% and five-year fixes from 3.7%.
The Bank of England Monetary Policy Committee has kept the base rate on hold at 3.75% for February.
Focus was on the vote split and the updated economic forecasts, with markets pricing in a further base rate cut in April, as the UK economic backdrop remains fragile, with weak jobs, slow growth, and rising political risk.
The decision by the Bank's Monetary Policy Committee was widely expected by economists. It voted to hold rates with a knife-edge 5-4 majority. Governor Andrew Bailey says his main message is "good news", with inflation due to fall to the Bank's 2% target sooner than expected.
In Arbuthnot Latham's latest market update, the private bank states that “The market is very much in risk-on mode, driven by global growth optimism, with stocks and gold hitting record highs.
“The US central bank kept rates on hold as expected, despite pressure from Donald Trump, who is likely to announce his nomination for a new Fed chair imminently.”
The European Central Bank also meets soon with no change expected as EU growth momentum picks up, helped by the Indian trade deal, with the euro benefiting from the growing ‘sell-US’ theme.
Property transactions were up in December
Property transactions are up 5% on a year ago, government data has revealed.
The number of UK residential transactions in December 2025 was 100,440, 5% higher than December 2024 and marginally lower (less than 1%) than November 2025.
The number of UK non-residential transactions in December 2025 was 10,640, 7% higher than December 2024 and 10% lower than November 2025.
Residential mortgage approvals totalled 61,013 in December, down 4.8% from November and 8.4% below the 66,634 seen in December 2024, according to the latest figures from the Bank of England.
What is happening in the mortgage market?
Aaron Strutt, product director at Trinity Financial, says: "There is little doubt that changes to mortgage affordability rules, along with cheaper fixed rates, are starting to make a difference by helping more people to get on the property ladder.
"It is a buyer's market at the moment, and confidence is starting to return, even though global economic uncertainty remains. Lots of potential buyers have been holding off buying and waiting for property prices to come down, and they have dropped in certain areas, especially when homes have been on the market for a long time."
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The information contained within was correct at the time of publication but is subject to change.
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