Will mortgage rates fall in 2025?

What will the rest of 2026 hold for UK mortgage rates?

(Image credit: Alex Robinson via Getty Images)

The new year mortgage price war could be over as mortgage rates are climbing again – but what’s in store for the rest of 2026?

Home buyers and borrowers had benefited from falling mortgage rates at the start of the year.

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What’s in store for the rest of 2026 though? With the Autumn Budget uncertainty firmly behind us and hopes of interest rate cuts in the coming weeks and months, could homebuyers and borrowers be set for a boost?

Which mortgage lenders are lowering rates?

Mortgage lenders are more likely to increase rather than cut rates at the moment.

While mortgage rates are on the rise, lenders are becoming more flexible on affordability criteria.

Lenders such as Nationwide and NatWest have boosted loan-to-income ratios to 6x in recent weeks.

Santander also recently released a 98% loan-to-value (LTV) mortgage for first-time buyers, meaning borrowers would only need a 2% deposit.

The lowest mortgage rate on the market is currently 3.45% for home movers, available from Lloyds Bank at up to 60% LTV.

NatWest has a market-leading remortgage rate of 3.64% for a 40% deposit.

The best deals can disappear quickly though if there is lots of demand so borrowers should act fast if they are ready to buy or remortgage.

Looking to remortgage? We reveal how to get the best deal.

What is the forecast for mortgage rates?

At its latest meeting in February, the Bank of England’s Monetary Policy Committee (MPC) narrowly voted by 5-4 to hold the base rate at 3.75%. Four dissenters voted to cut it to 3.5% so there is hope for a change in the coming months.

In the longer-term, HSBC has predicted the base rate will fall to 3% by the end of 2026 as inflation slows further. The latest Consumer Price Index (CPI) measure read 3.4% in December, according to the Office for National Statistics (ONS).

Stephanie Charman, chief executive of the trade body the Association of Mortgage Intermediaries, predicted the base rate settling around 3-3.25% in 2026. Any falls in the base rate should feed into mortgage rates.

Should you fix your mortgage?

If the last three years of rises and falls have told us anything, it's that predicting falls in mortgage rates is not an exact science. So, if you have one of the estimated 1.8 million fixed mortgage rates that is expiring this year, according to UK Finance, should you opt for another fixed deal?

Fixed rates can offer you certainty over what you’ll pay in interest over the course of the deal.

However, Mendes said a lot of lenders had already priced predicted falls in the base rate for 2026 into their deals in January, with a lot of some of the best two and five-year fixes below base rate.

“Fixed rates are likely to edge down more slowly than Bank Rate itself and could start to level off as we get closer to that ‘final resting place’,” Mendes added.

“Competition between lenders is still intense, which should keep downward pressure on rates, but the scope for sharp further falls looks limited unless expectations shift meaningfully lower.”

What about variable mortgage rates?

The average Standard Variable Rate (SVR) was an eye-watering 7.15% as of 5 February, according to Moneyfacts. The average two-year tracker was 4.41%.

Those on a high SVR would be wise to switch onto a fixed rate now. Even if fixed rates fall further, the money saved from getting rid of an expensive SVR earlier could make it worth it.

Anyone holding out for interest rates to fall further could opt for a tracker mortgage.

David Hollingworth, of mortgage broker London & Country, said: “Anyone that is sitting on a standard variable rate because they are hoping for more drops in fixed deals should consider whether a tracker would be a better option.

“The SVR is likely to be substantially higher and even if fixed rates do reduce over time, each month on SVR could be costing a lot more.”

What about buy-to-let rates?

According to Moneyfacts on 5 February, the average two-year buy-to-let mortgage rate is 4.70%, while the average five-year BTL rate is 5.08%.

These rates seem quite competitive compared to how high they have been over the past few years. Buy-to-let mortgage rates were pushing 7% in the summer of 2023.

Landlords will be hoping for a further fall in mortgage rates this year, to help offset the 5% stamp duty surcharge, less generous mortgage interest tax relief and higher income tax charges on property introduced in the 2025 Autumn Budget.

What mortgage support is available?

Mortgage rates are much higher than when many people would have last remortgaged. Millions of homeowners will be coming off rates as low as 1% or 2%.

If you’re struggling to make your mortgage repayments, the good news is that lenders representing 90% of the mortgage market have signed up to the government’s mortgage charter. They include the big banks like Halifax, HSBC and Santander and building societies like Nationwide, Leeds and Skipton.

The charter is a series of support measures intended to help those in difficulty. Borrowers will be able to make a temporary change to their mortgage for six months to give them some breathing space, such as switching to interest-only payments or extending their mortgage term to reduce their monthly payments. Customers have the option to revert to their original term within six months by contacting their lender.

About 1.7 million mortgages have benefitted from the mortgage charter since it was introduced in June 2023, according to the City watchdog.

Meanwhile, there is a 12-month delay before repossession proceedings can start against those who have missed payments. Regardless of whether your lender has signed up to the charter, all lenders also have a range of measures in place for customers experiencing difficulties.

Should I overpay my mortgage?

If you’ve got some spare cash and you're on a low rate, overpaying your mortgage can be a good way to protect yourself before your mortgage deal expires and you have to remortgage at a higher rate.

Our mortgage overpayment calculator shows how your monthly repayments will change and help you decide if it is worth it.

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Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and the i newspaper. He also co-presents the In For A Penny financial planning podcast.

With contributions from

Sam WalkerWriter