Leading Indicators | Rate stability, rising capital and renewed lending momentum

The Bank of England is widely expected to keep base rate unchanged at 3.75% on Thursday

With early signs of a cooling labour market alongside firmer domestic growth, both money markets and economists widely expect the BoE to leave its base rate unchanged at 3.75% at its February meeting. Having already lowered rates from 5.25% since August 2024, the Monetary Policy Committee is likely to proceed cautiously with any further reductions this year. Even so, most economists anticipate two additional quarter‑point cuts in 2026, which would bring the bank rate down to around 3.25% by year‑end.

Global capital favours the UK

Despite the uncertainty seen through 2025, the UK established itself as the second largest destination globally for cross-border CRE investment, trailing only the US. Total investment into the UK reached £28.2bn last year, up +3% year-on-year. Looking ahead to 2026, our Active Capital survey identifies the UK as the leading global destination for capital, with 60% of respondents aiming to target the market - reinforcing its continued appeal despite the shifting macro backdrop  

UK CRE lending rebounds to post-pandemic high

Net lending to UK commercial real estate rose again in December, reaching £2.47bn and lifting the three-month rolling total to £6.69bn - its highest level since May 2020. While lending to standing developments declined to -£337mn, lending to standing investments increased sharply, rising by £2.8bn. Strong investment activity in Q4 points to a pickup in dealmaking, while improved debt availability, reflected in higher loan-to-value ratios and narrower margins, has also supported refinancing volumes.