As 2026 approaches, many homeowners, prospective buyers, and investors are asking the same question: will mortgage rates go down in 2026?
With inflation softening and economic growth expected to remain subdued, discussions around potential interest rate cuts by the Bank of England are intensifying.
While falling rates may offer relief to borrowers across the UK, the path ahead is uncertain, influenced by multiple domestic and global factors.
In this comprehensive guide, we explore the UK mortgage forecast for 2026, dissect expert predictions, evaluate market drivers, and explain what all of this could mean for buyers, remortgagers, and landlords.
What Is the Current Mortgage Rate Situation in the UK?
As of December 2025, the Bank of England (BoE) base rate remains at 4.0%, following a series of rate cuts that began in late 2024.
This marks a notable shift from the 2024 peak of 5.25%, which had been introduced to tackle high inflation. With inflation easing and economic growth slowing, monetary policy has now moved toward a more supportive stance.
These changes have gradually filtered into mortgage pricing. Fixed-rate mortgage products, in particular, have seen steady declines throughout 2025. Lenders remain cautious, but competition and improved economic forecasts have helped reduce overall rates for borrowers.
Average UK Mortgage Rates (2024 vs 2025):
| Mortgage Type | Peak Rate in 2024 | Average Rate in 2025 |
| 2-Year Fixed | ~5.2% | ~4.2% |
| 5-Year Fixed | ~4.7% | ~4.1% |
| Tracker/Variable | Tied to 5.25% base rate | Tied to 4.0% base rate |
Despite the downward trend, uncertainty remains. While tracker and variable mortgages have offered quicker savings due to their direct link to the BoE base rate, lenders continue to price long-term risks cautiously.
What Are the Expert Mortgage Rate Predictions for 2026?
Expert predictions for 2026 suggest that mortgage rates may continue to ease as the Bank of England moves further into its rate-cutting cycle.
Most economists expect the base rate to fall to between 3.25% and 3.75% by mid-to-late 2026, assuming inflation remains under control and growth stabilises. While forecasts vary, many believe the easing phase will likely conclude in the second half of the year.
A smaller group of analysts expects the base rate to settle closer to 3.5%, while more optimistic projections point toward 3.25% by Q4 2026.
On the lender side, banks and building societies are preparing for potentially lower funding costs, which could lead to more competitive fixed-rate mortgage deals if economic conditions improve.
What Factors Will Influence UK Mortgage Rates in 2026?
Mortgage rates are shaped by an intricate combination of domestic and global forces. In 2026, three critical elements are likely to steer the market:
Inflation and Monetary Policy
The Bank of England’s primary mandate is to control inflation, aiming for a 2% target. As of late 2025, inflation stands at 3.6%, having dropped significantly from previous highs. Should this trend continue, there will be more room for rate reductions.
Economic Growth
The UK economy is forecast to grow at a modest 1% in 2026. Sluggish growth often gives central banks scope to support borrowing and spending through lower rates. However, stronger-than-expected data could force a more cautious approach.
External Market Forces
International interest rate movements, particularly in the US and EU, also play a role. Any tightening from other central banks, supply chain disruptions, or geopolitical events could increase volatility and dampen prospects of aggressive cuts in the UK.
Who Could Benefit If Mortgage Rates Drop in 2026?
Lower mortgage rates could offer substantial advantages to several categories of borrowers:
- Tracker or variable-rate mortgage holders: Will experience quicker savings in the form of reduced monthly repayments, especially if base rate reductions continue.
- Fixed-rate borrowers nearing renewal: Those whose deals expire in 2026 or early 2027 may be able to lock into better deals than were available in 2024 or 2025.
- First-time buyers: Improved affordability could reduce borrowing costs, although overall home affordability still depends on wages and deposit availability.
- Buy-to-let landlords: Especially those on interest-only or variable-rate products, could see better cash flow. However, rental yields and regulatory costs must still be considered.
While a drop in rates benefits most borrowers, the extent of savings will depend on loan size, remaining term, and when the rate change occurs during the mortgage lifecycle.
Will Falling Rates Make Mortgages More Affordable?
One of the primary concerns for borrowers is how much of a difference rate reductions will actually make. While lower rates improve affordability, the benefits may be more modest than dramatic, particularly when other living costs remain high.
Estimated Monthly Repayments on a £200,000 Mortgage Over 25 Years:
| Interest Rate | Estimated Monthly Repayment |
| 5.25% | £1,193 |
| 4.00% | £1,055 |
| 3.25% | £975 |
| 2.75% | £925 |
As the table shows, even a 1% reduction in rates can lower monthly repayments by over £100. However, mortgage affordability also depends on income growth, deposit size, and other lending criteria.
For many households, slow wage growth and ongoing cost-of-living pressures continue to restrict how much they can borrow, even if interest rates decline.
Should You Fix Now or Wait for 2026 Mortgage Deals?
This is perhaps one of the most pressing questions facing remortgagers and buyers alike. The decision to fix now or wait depends on personal financial circumstances, market confidence, and risk tolerance.
Fixing now offers certainty in monthly payments, shielding borrowers from any potential rate surprises. On the other hand, waiting could allow access to lower rates, particularly if the BoE follows through with further cuts.
Here are key factors to consider:
- If your fixed deal ends in early 2026: You may want to wait before locking into a new rate, especially if swap rates continue to fall.
- If you’re buying now: Consider short-term fixed products or flexible tracker deals if you anticipate rates dropping.
- Work with a broker: Brokers can monitor the market and help you “reserve” lower rates as they become available, often before they hit public comparison sites.
Ultimately, the right choice comes down to balancing stability with opportunity, ensuring your mortgage strategy aligns with both your financial goals and the direction of the market.
What Risks Could Prevent Mortgage Rates from Falling?
While many indicators suggest a downward trajectory for interest rates, several risk factors could disrupt these expectations:
- Persistent inflation: If inflation remains above target, the Bank of England may be forced to maintain current rates to anchor expectations.
- Labour market strength: Rapid wage growth or tight employment conditions may fuel inflation.
- External shocks: Global economic disruptions, conflict, or commodity price surges could trigger volatility.
- Consumer demand: If consumer spending accelerates, the BoE may hesitate to cut too quickly.
These risks underscore the importance of not relying solely on forecasts when planning mortgage decisions.
What Will Falling Rates Mean for the UK Housing Market?
The housing market is closely tied to borrowing costs. Cheaper mortgages typically increase buyer demand, which can support property prices. However, in 2026, the impact may be more measured due to other constraints.
Mortgage affordability remains a challenge for many households, even with reduced rates. While lower interest payments help, stagnant real incomes, tighter lending criteria, and high property prices continue to limit access to homeownership.
Furthermore, the supply side of the housing market remains tight. Even if demand increases slightly, constrained inventory and ongoing regulatory measures may prevent any sharp spikes in prices.
What Do the Numbers Say About Mortgage Rate Trends?
Mortgage rates have trended downward since peaking in 2024. To understand where we are heading, it helps to examine both historical rates and future projections.
Average Fixed-Rate Mortgage Trends (2024–2026):
| Date | 2-Year Fix Avg | 5-Year Fix Avg |
| Jan 2024 | 5.2% | 4.7% |
| Jul 2024 | 4.6% | 4.3% |
| Jan 2025 | 4.4% | 4.2% |
| Jul 2025 | 4.2% | 4.1% |
| Oct 2025 | 4.1% | 4.0% |
| Forecast Mid–2026 | 3.6% – 3.8% | 3.5% – 3.7% |
These trends suggest a slow but consistent easing, assuming economic data supports a dovish policy stance. However, as with all forecasts, flexibility remains key.
Conclusion
The available evidence points to a likely decline in mortgage rates during 2026, though expectations should remain realistic.
Most forecasts suggest a gradual easing of the base rate to between 3.25% and 3.75%, which would translate into modest improvements in mortgage pricing.
For variable-rate holders and remortgagers, the opportunities may be meaningful, especially when timing aligns with lender adjustments. First-time buyers and landlords could also see benefits, though affordability and regulatory pressures may temper enthusiasm.
Ultimately, while no prediction is guaranteed, borrowers who prepare early, monitor the market, and seek professional guidance will be best positioned to capitalise on the evolving mortgage landscape in 2026.
Frequently Asked Questions
Are mortgage rates guaranteed to fall in 2026?
No, they are not guaranteed. While forecasts point to a downward trend, actual rates will depend on inflation, GDP growth, and external economic factors.
When will mortgage repayments start to decrease?
Borrowers with tracker or variable-rate mortgages will see reductions shortly after base rate cuts. Fixed-rate borrowers will benefit when they remortgage.
Is 2026 a good year to remortgage in the UK?
Yes, potentially. If your current deal ends in 2026, you could secure a lower rate than what was available in 2024–2025. Early planning is key.
How will inflation influence mortgage rates in 2026?
If inflation remains stable or continues to decline, the Bank of England is more likely to reduce the base rate, which can lead to cheaper mortgages.
Will house prices go up if rates drop?
Possibly. Lower rates could increase demand, but affordability constraints and regulatory measures may prevent significant price spikes.
Can I lock in a 2026 mortgage rate now?
Not quite. But many lenders allow rate reservations up to six months in advance. Consult a broker to explore early options.
What should I do if my fixed deal ends in 2026?
Begin researching options at least 6 months in advance. Keep an eye on rate trends and engage a mortgage advisor for tailored guidance.
