When is the next UK interest rate decision and what will it mean for your mortgage?

The next Bank of England interest rate announcement arrives on Thursday, 5 February 2026 at noon. But if you’re hoping for relief on your mortgage payments, you’re likely in for a wait.

Markets are pricing in just a 4% chance of a rate cut this week.

The Monetary Policy Committee is almost certain to hold the base rate at 3.75%, where it’s sat since December’s narrow 5-4 vote to reduce it from 4%.

According to Terence Hove, Senior Financial Markets Analyst at Exness, “The BoE might cut interest rates four times this year, but not in a hurry. Downbeat employment data, inflation, and US tariffs keep the central bank on its toes. Meanwhile, GBPUSD remains bid in the area of 1.3700 as traders await Thursday’s announcement.”

Why the hesitation?

The problem is inflation. December’s figures showed consumer prices rising 3.4%, up from 3.2% in November and higher than the 3.3% economists had forecast. That’s still well above the Bank’s 2% target.

Wage growth remains sticky too. MPC member Megan Greene recently warned that pay rises of 3.5% or more are expected this year, making it harder to justify cutting rates too quickly.

A Reuters poll of 56 economists found 54 expect a hold and only two predict an interest rate cut. The message from Bank governor Andrew Bailey has been clear: rate cuts will be gradual, and each decision is becoming “a closer call”.

What does this mean for a £250 000 mortgage?

If the base rate holds at 3.75%, your monthly payments stay unchanged for now. But the longer-term picture offers some hope.

Most economists still expect two or three rate cuts during 2026, just not yet. Deutsche Bank and others predict cuts could arrive in March or later in spring, potentially bringing the base rate down to 3.25% or 3.5% by year’s end.

For context, a £250 000 mortgage on a tracker rate following the base rate would see monthly payments of roughly £1 230 at the current 3.75%. If rates dropped to 3.25% over the year, that could fall to around £1 180, saving you £50 monthly or £600 annually (about R14 500).

Fixed-rate mortgage holders won’t see immediate changes, but those remortgaging later this year might find slightly better deals if the predicted cuts materialise.

The key word remains caution. With inflation still elevated and the labour market showing mixed signals, the Bank is walking a tightrope between supporting growth and keeping prices under control.

Thursday’s interest rate announcement will set the tone for 2026’s monetary policy, but don’t expect fireworks.