In a widely anticipated move, the Bank of England (B of E) voted to keep the base rate on hold at 3.75% earlier this month, as it tries to balance rising inflation against a weakening economy.

Inflation rose to 3.4% in December, up from 3.2% the previous month. Driven by higher energy, service and wage costs, it remains stubbornly above the Bank’s 2% target.

At the same time, however, the UK’s GDP grew by just 0.1% in the final three months of 2025, and unemployment climbed to 5.1%, its highest level in four years.

Although the pressure is on for the Bank to cut rates to boost the economy, it has, for now, decided to wait until inflation is on a clear downward path rather than risk stoking it up by moving too early.

The B of E does hint, though, at the possibility of future cuts, saying: “If the economy and the outlook for inflation evolve as we expect, there should be scope for some further cuts to Bank Rate this year.

“But we’ll have to judge the latest information and data at each of our meetings and set whatever interest rate is necessary to make sure that inflation stays low and stable.”

Swap rates, which are a key driver of mortgage rates and are based on the future direction of the base rate, were already on the rise. They are, though, now coming back down again, and the movements were relatively small. It is only when the money markets get a clearer idea of the timing of the next rate cut that there will be any significant falls.

Below is a selection of this month’s best buys from Moneyfacts.co.uk:

Two-year fixed rates: 3.70% from first direct. Product fee £490. 60% LTV. For remortgages.
3.77% from Yorkshire BS. Product fee £995. 60% LTV.

Five-year fixed rates: 3.79% from first direct. Product fee £490. 60% LTV. For remortgages.
3.89% from first direct. Product fee £0. 60% LTV

Discounted variable: 3.95% From Progressive BS for 2 years. Product fee £995. 75% LTV.br> 3.98% From Cumberland BS For 2 years. Product fee £999. 60% LTV.

BUY-TO-LET (BTL)

Best two-year fixed rate: 2.49% from The Mortgage Works. Arrangement fee 3.00% Advance. 65% LTV.

Five-year fixed rate: 3.44% from The Mortgage Works. Arrangement fee 3.00% Advance. 65% LTV.

Best Discounted variable: 4.25% For 5 years. From Newbury BS. Arrangement £950. 75% LTV.

The information we provide is our personal opinion and should not be relied upon for financial advice. Should you need financial advice or guidance please contact an appropriate professional.