UK inflation fell to a 10-month low of 3 percent in January, strengthening expectations that the Bank of England will cut interest rates next month. The Consumer Prices Index dropped from 3.4 percent in December, according to the Office for National Statistics, driven by falling transport and food costs.
Markets are now pricing an 84 percent chance that the Bank will reduce the base rate from 3.75 percent to 3.5 percent at its next meeting on 20 March. For landlords with tracker mortgages or those approaching refinancing, the data signals further relief on borrowing costs may be weeks away.
BTL mortgage costs already easing
The average buy-to-let mortgage rate has fallen to 4.84 percent, down from 5.51 percent a year ago, according to Rightmove data. Two-year fixed residential rates now average 4.23 percent compared with 4.99 percent in January 2025.
Hina Bhudia, partner at Knight Frank Finance, said the combination of softer inflation data and weak employment figures raised the likelihood of two rate cuts this year. “Leading fixed rates have remained steady in the past four weeks and there has been considerable jostling for position in the middle of the market,” she said.
Bhudia added that this week’s figures would “pave the way for fixed rates to ease further in the coming month leading up to the next interest rate decision on March 19th.”
Landlord mortgage payments down £119 year-on-year
Rightmove analysis shows the national average monthly mortgage payment stood at £1,592 in January, down £119 from the same time last year. London buyers have seen the largest year-on-year drop in monthly payments at £207, reflecting the proportionally greater savings on higher-value properties.
Caitlyn Eastell, personal finance analyst at Moneyfactscompare, said swap rates had recently hit 30-day lows following unemployment data. “Pair this with cooling inflation and the Bank of England could move towards a base rate cut,” she said. “This would be welcome news for borrowers, as it could encourage lenders to reduce interest rates on their borrowing.”
The inflation figures follow recent data showing BTL repossessions dropped 14 percent as mortgage arrears hit a two-year low, suggesting landlords have largely weathered the recent period of elevated rates.
What drove the January decline
The ONS attributed the fall to easing transport and food costs. Air fares reversed December’s spike while petrol prices dropped by 3.1 pence per litre between December 2025 and January 2026. Food inflation eased to 3.6 percent from 4.5 percent, its lowest level in nine months.
At its most recent meeting, the Bank of England said it expected inflation to reach its 2 percent target by April. The January reading suggests that timeline remains on track, though some economists urge caution given inflation remains above target.
Editor’s view
After months of waiting, landlords approaching refinancing finally have clearer sight of where rates are heading. A March cut would mark the second reduction since the cycle turned, and with fixed rates already competitive, the spring refinancing surge could prove less painful than many feared.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 19 February 2026
Sources: Office for National Statistics, Bank of England, Knight Frank Finance, Rightmove, Moneyfactscompare
Related reading: BTL trackers launch as lenders cut rates ahead of spring
