Comment on the Bank of England’s decision to hold interest rates at 3.75%

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.

Neil Louth, CEO of The Acorn Group (part of LRG)