Interest rates stay at 3.75%: what this means for your money

The BoE base rate will remain at 3.75%, it was announced today, Thursday 5 February.

Five members of the BoE's Monetary Policy Committee (MPC) voted to keep the base rate at 3.75%, while the remaining four voted for a cut to bring the rate to 3.5%.

The rate was initially cut to 3.75% back in December 2025, bringing the base rate to its lowest point in almost three years.

This cut, along with other factors such as an unexpected spike in recent inflation data and higher wage growth than the BoE would like, led to a base rate hold being predicted.

Looking to the remainder of the year, experts are split on whether cuts are likely.

According to reports, markets are pricing in one or two cuts in 2026, but this will largely depend on the ease of pay growth and inflation. The current inflation rate is 3.4%, while the BoE target is 2%.

What does a held base rate mean for mortgages?

Following the BoE’s decision, there should be no change for variable-rate mortgage holders.

For fixed-rate mortgage holders, there will be no change until your fix ends. The average five-year fixed-rate mortgage rate is currently 4.37%, according to Rightmove.

Looking ahead to the coming months, the unexpected rise in the inflation rate has led many to believe a cut won’t come any time soon, with mortgage rates flattening as a result.

According to the HomeOwners Alliance, “sharp falls in mortgage rates aren’t expected as much of the predicted outlook for the base rate has already been priced into fixed rate mortgages – the cheapest 2-year fixed rate deals available are below the current base rate of 3.75%, reflecting expectations of further cuts.”

It is more expensive than ever to buy your own home, as mortgage rates remain higher than in previous years.  

If you’re applying for a mortgage, there are criteria you must meet, including ensuring you can afford it, having a strong credit score, and clearing outstanding debt.   

A qualified mortgage broker can boost your chances of a successful application.  

What does it mean for savings?

Despite savings rates now lower than their recent 6% high, the vast majority still beat inflation.

Below are some of the top rates for different types of savings accounts, according to MoneySavingExpert:

• Easy-access savings accounts: 4.5%

• Fixed term accounts (one year): 4.24%

• Notice savings: 4.33%

For those who want better returns and don’t need relatively easy access to their money, investing is an option. While this can lead to better returns, it comes with more risk.

If you do choose to go down the path of investing, it’s always good to get professional advice.

You can quickly match with a qualified financial adviser via Unbiased, who can help you with an investment strategy, review your portfolio, or advise you on how to reduce your tax bill legally.    

What does it mean for annuities?

An annuity is a product typically purchased with retirement funds that offers guaranteed income for a fixed period or for life.  

The base rate affects annuity rates, so they change constantly. Throughout 2025, annuity rates have soared by nearly 10%. However, once you purchase your annuity, you can lock in your rate.

Unbiased can match you with a financial adviser who can help you find the best annuity for your circumstances.    

Get expert financial advice

Whatever your financial goal, whether you’re looking for a mortgage, building your investment portfolio, or saving towards retirement, professional financial advice is always valuable.

Unbiased can easily connect you to an expert who can help you make the best decision to meet your goals.