If the Bank of England holds interest rate at 3.75% what are the likely affects

5th February 2026

If the Bank of England holds the UK base interest rate at 3.75% (as expected) in its announcement today what are the affects.

Holding the rate at 3.75% means the cost of borrowing money (on average) won't change immediately for consumers and businesses. Lenders typically build on this base rate when setting mortgage, loan and savings rates.

The Bank is signalling it wants more evidence that inflation is falling toward its 2% target before making further changes. Markets currently expect rate cuts may begin around April 2026 — but this isn't certain.

Lenders may cut mortgage rates slightly even without a change in the official rate — because markets price in future rate expectations. Some lenders have already trimmed fixed-rate products in anticipation.

If the Bank holds rates now but markets bet on cuts later, fixed mortgage rates can fall modestly over time.

For borrowers

Those on tracker or variable mortgages may see smaller cuts later if lenders reduce pricing in anticipation of future BoE cuts.

Fixed-rate mortgage holders won't see immediate benefit unless they remortgage later at lower rates.

Any interest rate changes typically take weeks or months to filter through fully into personal mortgage deals.

Effects on savings

Keeping the base rate steady tends to mean that savings interest rates will also stay relatively steady rather than rise sharply.

Savers may enjoy modest returns on easy-access or fixed savings accounts, but real returns (adjusted for inflation) might stay low.

Inflation and prices

The Bank is holding the rate because inflation is still above target around 3.4% recently, higher than the 2% goal.

Higher inflation means consumers may still face rising prices for goods and services even if borrowing costs don't rise further right now.

Broader economic activity

A steady rate helps provide some certainty for businesses and households making investment and spending decisions.

At the same time, there are mixed signals about the economy — moderate growth in sectors like manufacturing, but also signs of weakness in parts of the labour market.

What this doesn't mean

It doesn’t guarantee mortgage rates will stay the same forever — lenders often adjust their pricing based on market expectations and competition.

It doesn’t mean inflation is "solved" — the Bank wants to see clearer evidence inflation is sustainably approaching 2% before cutting again.

It isn’t a signal that rates will rise most forecasters expect the next move (if any) to be downward, not upward.

Holding rates at 3.75% today likely means no big change immediately, but it sets the scene for potentially lower borrowing costs later in 2026 if inflation continues to fall. For borrowers, this could mean more favourable mortgage deals in the months ahead but there’s no guarantee on timing or magnitude yet.

The Bank of England will announce the interest rate at midday today 5 February 2026.