21/12/2025
On the 18th Dec 2025, the Bank of England confirmed a reduction in the base interest rate following its latest Monetary Policy Committee (MPC) meeting.
We wanted to provide a clear, balanced update on what this change means in practice, and how leading economists and housing market commentators currently view the outlook for mortgage rates and UK property in 2026.
What has changed today?
The Bank of England’s decision reflects:
Inflation continuing to ease towards the Bank’s 2% target
Slower economic growth across the UK
A desire to support economic stability while remaining cautious about future inflation
It is important to understand that:
The base rate does not automatically determine mortgage rates
Mortgage pricing is influenced by market expectations, swap rates, and lender competition
Some mortgage rates may already reflect this change
What does this mean for mortgage rates?
According to UK Finance, major lenders, and financial market commentary:
Mortgage rates have eased compared to their 2023–2024 highs
Further improvements, if they occur, are expected to be gradual
A return to ultra-low interest rates is not anticipated by mainstream forecasters
Overall, the outlook is one of greater stability rather than sharp movement.
UK property outlook for 2026 – what reliable forecasts say
Independent housing market commentators broadly expect modest, sustainable growth rather than a boom.
Selected forecasts from recognised sources:
Nationwide: UK house prices forecast to rise by 2%–4% in 2026
Halifax: Expects low single-digit growth nationally
Rightmove: Forecasts around 2% growth, with regional variation
Office for Budget Responsibility (OBR): Expects steady house price growth from 2026 following recent market adjustment
Common themes across these forecasts:
Affordability remains the key constraint
Regional markets such as the Midlands and North West are expected to outperform London
Well-priced properties continue to attract demand
There is no mainstream forecast suggesting a housing market crash, but equally no expectation of rapid price inflation.
What this means for you
A change in the base rate does not mean that everyone should take action.
Any mortgage decision should always consider:
Your current deal and remaining term
Your future plans
Your income stability and affordability
Your attitude to payment certainty and risk
Our role is to help clients understand their options clearly, not to encourage market timing or assumptions.
Important notice
This information is provided for general use only and does not constitute personal financial advice. If you would like to discuss how recent changes may affect your own circumstances, we would be happy to arrange a personalised review.
Naaman
