Comment on interest rate hold underlining ‘higher for longer’ reality

Commenting on a hold in UK interest rates underlining the ‘higher for longer’ reality, Daniel Austin, CEO and co-founder at ASK Partners, said: “The Bank of England’s decision to hold rates at 3.75% underlines the ‘higher for longer’ reality facing households and property markets. While policymakers are signalling cuts later this year, the recent uptick in inflation shows the path back to target won’t be linear, and that’s keeping confidence fragile among buyers and developers alike. Mortgage pricing has improved and any further easing will be welcome, but it will take time for meaningful relief to filter through to monthly costs.

“In the meantime, mainstream housing activity is likely to remain subdued, with capital continuing to favour structurally resilient, income-led sectors such as build-to-rent, co-living, logistics, storage and data centres where undersupply supports demand. A clearer downward trajectory for inflation and rates moving sustainably lower would be the real catalyst for unlocking stalled projects. Until then, disciplined, income-focused and debt strategies offer a pragmatic way for investors to stay active while managing risk.”

 

Katie Horne, savings expert at Flagstone on today’s decision to hold interest rates:
 
Today’s decision to hold interest rates comes as little surprise. December’s inflation bump had already taken the prospect of an early new-year rate cut off the table, and today’s announcement confirms that interest rates will remain higher for longer.

Average easy-access savings rates are still sitting below inflation, and the recent uptick in inflation has only widened that gap. However, savers aren’t powerless.

A flurry of market-topping rates has captured attention in recent weeks. These are outliers compared with what’s typical in the current market, and they’re unlikely to stay that high forever. That said, there are still plenty of competitive rates on offer that are holding up well, remain easily accessible, and can help savvy savers earn inflation-beating returns on their hard-earned cash.

 

Three in five savings accounts available via Flagstone currently beat inflation, even at today’s elevated level.

 

Paul Noble, CEO of Chetwood Bank, said: “I don’t think anyone believes today’s result means rates will stay at their current level for long. The MPC might be getting mixed signals from the economy, but it feels like there’s a general sense that it’s only a matter of time before we see another cut.

“That expectation is already feeding into pricing, particularly at the short end of the market. Whilst we’re seeing savings rates gently ease back as the market anticipates lower bank rates later this year, longer-term borrowing costs, including mortgage pricing, remain influenced by where longer-dated swap rates settle. These have been more resilient.

“Falling swap rates will mean we almost certainly see rates go down across the entire savings space in the coming weeks, which means smart savers will look to lock down the best fixed-rate deals while they’re still high. Across the board, savers need to be alert and make sure they’re making the most of their money, particularly any funds left in low- or no-interest accounts when they could be making more of a difference.”

 

Comment on the Bank of England’s decision to hold interest rates at 3.75%
Neil Louth, CEO of The Acorn Group (part of LRG)

Overview

While the Bank of England holding interest rates at 3.75% isn’t headline news, but it does give buyers, sellers and lenders the steady footing they’ve been asking for, for many years. It will also help maintain the substantial momentum that we’ve seen in the market recently.

Across LRG and The Acorn Group we have had a strong start to the year, with buyer activity and viewing numbers rising. London specifically has been more resilient than some headlines suggest, with agreed new sales up 10% in January year-on-year, 13% more properties on the market and 38% more new buyers registering. And we’ve seen similar momentum across our Home Counties brands such as Chancellors, Gibbs Gillespie and Romans.

The reason interest rates are being held

Despite a very positive start to the year in property sales, there are external factors at play which prevent the Bank from following December’s cut with a further cut so soon. Inflation has risen slightly again – CPI rose to 3.4% in the year to December 2025, from 3.2% in November; wage growth is predicted to rise by 3.6% in 2026, and geopolitics remains unpredictable. Understandably, the Bank is reluctant to cut quickly then U-turn later.

What it means for mortgages and affordability
The good news for home movers is that the mortgage market does not wait for the MPC. Lenders have already been repricing, competition is back and we are seeing sharper two-year and five-year fixed rates. Affordability testing is easing too, which can help buyers access higher borrowing multiples.

Those coming off fixed deals are, in many cases, refinancing into a better rate than they feared a year ago. That great news for second-steppers and aspirational moves, not just first-time buyers. And most importantly it keeps property chains in tact.

A message to buyers and sellers

Interest rates are expected to remain at around 3.75% in the near term, providing welcome stability for those planning a move. At the same time, improving affordability and increased choice mean more buyers are finding that the homes they want are both achievable and available.

Looking ahead

Over the longer term, we anticipate a gradual easing in rates, with Bank Rate trending towards around 3–3.25% by the end of 2026. This steady improvement should continue to support affordability and encourage sustainable, confident market activity — rather than sudden or disruptive change.

In the meantime, the market is functioning well for buyers and sellers alike and as the year progresses we expect to be assisting not just those who had to move through necessity (as we did last year) but increasingly aspirational movers too.

 

Patrick Farrell, Group Chief Investment Officer at Charles Stanley, comments: “The Bank’s tone highlights how cautiously policymakers are approaching this stage of the cycle. With signals from inflation and the labour market still mixed, they’re navigating a far more stop start environment than in the past. At times, it feels like waiting for a bus that may or may not be running. There’s no set timetable, and each move now depends on whether upcoming data gives the Bank enough confidence to act.

“For investors, this uncertainty is likely to frame the year ahead. Growth isn’t strong enough to remove doubts, nor weak enough to force decisive action, leaving the path for rates open ended. Instead of the smoother, more predictable cutting cycles of the past, we may see a more uneven journey. In this setting, staying adaptable, diversifying effectively, and being prepared for a range of outcomes will be essential for investors as global policy shifts unfold.”



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