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Where We Stand: Base Rate and Market Mood The Bank of England cut the Bank Rate to 3.75% in December, marking the first reduction after a prolonged period of higher rates. The move reflected easing inflation and a slowing economy, and confirmed that interest rates have likely passed their peak. However, while the direction of travel is now downwards, progress is expected to be gradual. Markets are increasingly focused on how persistent inflation will be and how quickly further cuts might follow, rather than assuming a smooth run of reductions. Fixed Deals: Driven by Swap Rates as Much as Base Rate Fixed mortgage rates are heavily influenced by swap rates, which is particularly relevant at the moment. SONIA swap rates fell through much of 2025, helping fixed mortgage rates improve ahead of the December base-rate cut. Since late December, some swap rates have edged slightly higher, although movements have been modest and vary by term. This reflects short-term market reassessment rather than a clear change in the longer-term outlook. This helps explain why fixed mortgage rates have not continued to fall consistently month-on-month. While rates remain lower than their highs earlier in 2025, recent movements in swap rates suggest that further improvements may be slower and less predictable in the near term.  That said, competition between lenders remains healthy, and attractive deals are still available! If your current deal ends in the next 6 months it is still sensible to review options early. Securing a rate now can provide certainty, while keeping the flexibility to switch if pricing improves again. Looking Ahead: What Could Early 2026 Bring? The next Bank of England decision is due in early February. Further base-rate cuts are possible later in the year, but they are likely to be cautious and data-driven. For fixed-rate borrowers, swap rates will remain the key indicator to watch. If markets regain confidence that inflation will continue to ease, swap rates could fall again - supporting lower fixed mortgage pricing. If not, pricing may stabilise for a period rather than continue to drift down. What This Means for Borrowers and Home Buyers Fixed rate ending soon - Start comparing options now. Acting early gives you certainty and avoids last-minute pressure. First-time buyer or mover - Rates are lower than they were last year, but changes may be gradual. Focus on what fits comfortably within your budget. Tracker or variable rate borrower - The December base-rate cut may already have reduced your payments. Future cuts remain possible but are not guaranteed in the short term. Buy-to-let borrower - Lender appetite has improved, but pricing is sensitive to swap-rate movements. Reviewing options early remains important. What We Are Watching This Month The Bank of England’s February rate decision. SONIA swap rate movements and what they signal about market expectations. Whether lenders absorb recent swap increases or pass them into pricing. Early-year housing market demand and buyer confidence. Final Thoughts January feels like a month of measured realism. The base-rate cut was an important milestone, but recent movements in swap rates show that the path down will not be perfectly smooth. For borrowers, this reinforces the value of planning ahead rather than trying to time the market. If you are thinking about buying, moving or remortgaging in 2026, now is a sensible time to review your position and consider your options. We can help you assess different scenarios and decide the best approach for you.

Bank of England Cuts Base Rate to 3.75% - What It Means for Mortgage Borrowers On 18 December 2025 , the Bank of England (BoE) delivered a 0.25% cut to the official base rate , reducing it from 4.00% to 3.75% . This move marks the first reduction since November and aims to provide some support to a slowing UK economy amid easing inflation. What Has Changed? Bank Rate is now 3.75% The Bank’s Monetary Policy Committee (MPC) voted, by a narrow majority, to lower the base rate by a quarter percentage point in response to slowing inflation and softer economic data. This reduction is part of a broader trend of rate cuts seen through 2025 as price growth continues to ease and policymakers look to support growth. What This Means for Mortgage Borrowers Tracker & Variable-Rate Mortgages If you’re on a tracker mortgage or a standard variable rate (SVR) , this cut should feed through into lower monthly repayments- albeit not immediately. Lenders typically adjust their variable products to reflect changes in the base rate, so you may see your monthly payment fall over the coming weeks as lenders update pricing. Fixed-Rate Mortgages For many borrowers on fixed-rate mortgages , your current deal won’t change until it ends. However, new fixed rates are likely to soften , especially on shorter-term products , as competition increases and markets price in the lower Bank Rate. Brokers are already seeing some fixed rates drop nearer to pre-pandemic levels as lenders compete. Remortgagors & Those Coming Off Deals If your fixed deal is expiring soon , this cut could mean more attractive remortgage options - but acting early remains key. It’s worth starting your remortgage search three to six months before your deal ends to capture improving pricing. A lower base rate doesn’t guarantee the lowest deal forever, but markets have responded positively and lenders are reacting. What This Means for the Wider Market Housing Activity Lower borrowing costs can help stimulate housing demand , particularly for first-time buyers and homeowners looking to move or remortgage. Industry commentators are already noting a price-war environment among lenders , which could push two- and five-year fixed rates lower in the weeks ahead . Savers & Other Borrowers If you’re saving money, this cut could see interest rates on savings accounts drift down , as banks and building societies adjust rates across the board. Credit card and unsecured loan rates may also fall, but usually with a lag after base-rate changes. Should You Do Anything Now? Here are a few practical points to consider: ✔️ Review your mortgage deal if it’s nearing expiry - use this cut to compare options now rather than waiting. ✔️ Contact a broker if you’re on a tracker/SVR to understand when your lender updates your rate. ✔️ Don’t delay if you’re planning a purchase - softer pricing could mean better borrowing costs this side of Christmas and into 2026. ✔️ Keep an eye on markets - further base-rate moves aren’t ruled out next year, depending on inflation and economic data. Final Thoughts The BoE’s move to 3.75% is good news for borrowers - particularly those already on variable products or nearing a remortgage. But while cheaper borrowing costs are welcome, the broader economic backdrop remains cautious, and lenders will continue to price risk into mortgage deals . Staying informed and proactive will help you make the most of this easing cycle.