BASE RATE 3.75% - What This Means for You

The Bank of England has cut the Base Rate by 0.25% to 3.75%, the lowest level since February 2023, following a sharper-than-expected fall in inflation to 3.2%.

Mortgage rates at a glance

  • 2-year fixed rates are now cheaper than 5-year fixes for the first time in years.
  • Average 2-year fixed: 4.24% (down 0.82% from last year)
  • Average 5-year fixed: 4.35% (down 0.47% from last year)

Shorter-term fixes are now more attractive, reflecting reduced short-term risk for lenders.

What it means for your mortgage

  • Fixed-rate borrowers: No change until your deal ends. If your fix is ending soon, it’s worth exploring options — some lenders let you lock in a rate now and switch later. If you need a mortgage adviser, we can refer you to a good local company on request.
  • Tracker & variable rates: Expect a drop of up to 0.25%, potentially saving around £15 per month per £100,000 borrowed.

Affordability

Lower Base Rates may make borrowing easier. Lenders’ “stress tests” often use Standard Variable Rates to check repayment capacity — a reduction could improve affordability for buyers.

Looking ahead

The Bank reviews rates every six weeks. While historic lows of 2021 are unlikely, markets expect up to two more cuts in 2026, depending on economic conditions. The next decision is due on Thursday 6 February 2026.