Bank of England Holds at 3.75% — Why a March Cut Is Now Almost Certain and What It Means for Investors

On 5 February 2026, the Bank of England's Monetary Policy Committee voted five to four to hold the base rate at 3.75%. It was a notably close call — the narrowest possible majority — and that split vote tells you more about where rates are heading than the hold itself does. Four members argued conditions already justified a cut. With inflation now at 3.0% and unemployment climbing to its highest level in five years, markets have since priced in an 84% probability of a cut to 3.5% at the March meeting. For property investors positioning ahead of that decision, the signals are clear.

The Data That Swung the Argument

The February hold came against a backdrop of sticky inflation at 3.4% in December, which gave the cautious majority enough cover to wait. But the January inflation figure, released after the decision, changed the picture materially. The ONS confirmed that the Consumer Prices Index fell back to 3.0% in January — directly in line with forecasts and consistent with the Bank of England's own projection that inflation will return to its 2% target by April 2026.

At the same time, the labour market has softened faster than many anticipated. Unemployment in the three months to December reached 5.2%, representing 1.9 million people out of work — the highest rate since late 2020 and an increase of 330,000 year-on-year. Youth unemployment has been hit particularly hard, with 739,000 people aged 16 to 24 out of work, the highest rate for that group since 2015. The combination of falling inflation and rising unemployment is precisely the environment in which the MPC's hawks become doves.

Why This Matters More Than the Hold

The instinct is to read a hold as neutral. It isn't — not when the vote is five to four and the economic data has moved in one direction since the decision. One MPC member has publicly forecast three rate cuts in 2026, which would bring the base rate to 3.0% by year end. Markets currently have around 80 basis points of cuts priced in across the rest of the year, suggesting two to three reductions are considered the base case.

For property investors, the importance of this trajectory is structural, not cyclical. Base rate moves set the floor for mortgage pricing. The two-year and five-year fixed rates that lenders offer are driven by swap rates, which themselves respond to the forward interest rate path. We have already seen some lenders reprice products upward in recent weeks as markets recalibrated around the February hold — but the direction of travel remains firmly downward. Investors who lock into longer-term fixed products today are doing so with a lower rate environment ahead. The question is whether to fix short and refinance into lower rates, or lock in current certainty for five years.

Implications for Buy-to-Let and Portfolio Investors

For landlords and portfolio investors, the rate cut cycle has direct implications for both acquisition economics and portfolio refinancing. A cut to 3.5% in March — followed by further reductions to 3.0% or below by Q4 — meaningfully improves the debt-servicing maths on leveraged property investments. Stress tests applied by lenders, which have been constraining maximum loan sizes, become less punitive as the rate environment normalises.

Buy-to-let mortgage rates for limited company structures, which currently sit in the 4.5%–5.5% range for five-year fixes depending on loan-to-value, would typically follow a base rate reduction within weeks as lenders compete on new business. Around 4 in 10 landlords are planning to refinance in the coming year, and those with products maturing in Q2 or Q3 of 2026 are likely to benefit from pricing that is materially better than what was available six months ago.

There is also a demand effect to consider. Cheaper borrowing improves affordability for owner-occupiers, which sustains transaction volumes and supports capital values. A more active sales market benefits investors who are acquiring or disposing of assets. Equally, rising unemployment — the flip side of this rate-cutting environment — creates cautionary noise around tenant quality and arrears risk, particularly in lower-income demographics. HMO operators and investors in higher-demand segments should be less exposed to this than those relying on benefit-dependent tenancies.

What to Do Before March

The March MPC meeting is scheduled for 19 March 2026. If the cut materialises — and the probability currently sits at 84% — expect lenders to begin adjusting product ranges within days. The period between now and that announcement is a strategic window. Investors approaching a refinance should be speaking to brokers now to understand what rates they can lock in, and whether a tracker product bridging to a new fix makes sense given the anticipated path. For those considering acquisitions, stress-testing deals against both current and anticipated mortgage costs will clarify whether deals that look marginal today become clearly viable by mid-year.

The bigger picture is this: the February hold was a pause, not a reversal. The MPC is on a cutting cycle, the data is moving in the right direction, and the base rate is expected to end 2026 materially lower than where it started. Investors who treat this as a static environment will miss the repricing. Those who act ahead of it — whether through locking in refinancing, stress-testing acquisitions at lower rates, or simply expanding their search criteria — stand to benefit from a more favourable cost of capital than at any point since 2022.