BoE Holds Interest Rates at 3.75%: What It Means for UK Contractor Mortgages

The Bank of England's Monetary Policy Committee has voted to hold interest rates at 3.75% following its first meeting of 2026, a move that follows December’s cut from 4%. This decision, made by a narrow 5-4 majority, provides a mixed but cautiously optimistic outlook for the UK economy. For UK-based Day Rate Contractors, Limited Company Contractors, Umbrella Company Workers, and Self-Employed Professionals, understanding these signals is crucial when considering first homes, remortgages, or Buy-to-Let property financing opportunities.

The Monetary Policy Committee's decision to hold rates at 3.75% was unexpectedly close, contrasting predictions of a more decisive majority. While Governor Andrew Bailey highlighted "good news" regarding inflation expected to meet the 2% target earlier, the Bank also revised down its 2026 economic growth forecast and predicted a higher uptick in unemployment. This complex outlook reflects ongoing economic uncertainties despite positive inflation trends.

The Bank’s expectation of inflation falling to around 2% from April, driven by lower energy bills, slowing food price rises, and stabilising wage growth, signals an economic cool-off. This environment, alongside "weaker demand" as people favour saving, suggests scope for further rate cuts. For contractors and self-employed professionals, a sustained downward trend in inflation could translate into more competitive mortgage products in the near future, making financing for first homes, remortgages, or BTL properties potentially more favourable.