The quick version:
Mortgage rates in the UK have come down a little over the last few months. They’re now sitting around 5%, after peaking much higher last year at 5.18%. The Bank of England cut interest rates in August, and that helped bring borrowing costs down. Experts think rates could fall a bit more at the start of 2026, though there may be bumps along the way.
What’s changed recently
- Cheaper loans: In August 2025, the average fixed mortgage rate was just over 5%. By October, it was closer to 9–5%.
- Why? The Bank of England lowered its base rate to 4%, making it cheaper for banks to borrow money, and in turn, to lend to you.
- A small rise in October: Some lenders increased rates slightly when the financial markets moved, showing that mortgage prices can still change quickly.
What could happen in early 2026
- More rate cuts likely: Many experts think the Bank of England will lower rates again in early 2026 if inflation keeps easing.
- If that happens, mortgages should get a bit cheaper. Some forecasters think the best fixed deals could drop into the high 3% or low 4% range next year.
- But nothing’s guaranteed: If inflation stays stubborn or markets change, rates could hover around 5% for longer.
What this means for you
- If you already have a mortgage: You might see slightly lower payments when you remortgage next year.
- If you’re buying for the first time: You could face slightly better deals in 2026 — but don’t wait too long if you find a rate that fits your budget, as they can change fast.
- If you’re renting or saving: Falling interest rates may reduce savings returns but could make owning a home a bit more affordable.
Bottom line:
Mortgage rates in the UK have eased but remain higher than before 2022. The direction for early 2026 looks gently downward; not a crash in costs, but possibly a little relief for borrowers.
Sources:
https://moneyfactscompare.co.uk/news/mortgages/rates-rise-for-first-time-in-eight-months/
https://moneyfactscompare.co.uk/news/mortgages/two-year-mortgage-rates-see-biggest-monthly-drop
https://www.bankofengland.co.uk/explainers/current-interest-rate
https://moneyweek.com/personal-finance/mortgages/latest-UK-mortgage-rates