Mortgage Rate Predictions 2026 UK: What Borrowers Should Expect

Landlords

Posted in Jan 16 , 2026

Where UK Interest Rates Stand in Early 2026

As of January 2026, the Bank of England base rate stands at 3.75%, following a reduction in December 2025. This was the first cut since rates peaked above 5% during the inflation cycle.

This shift reflects:

Inflation is falling closer to the Bank of England’s 2% target
Slower wage growth compared to 2023–2024
Reduced pressure on household borrowing

Although one cut has already taken place, the Bank has confirmed that future changes will remain data-dependent, not automatic.

Current Mortgage Rates at the Start of 2026

At the beginning of 2026, commonly available mortgage rates across UK lenders typically fall within the following ranges:

Mortgage Type	Typical Rate Range
2-year fixed (75% LTV)	4.2% - 4.6%
5-year fixed (75% LTV)	3.9% - 4.3%
Tracker mortgages	Base rate + 0.5% to 1.0%
Standard variable rate (SVR)	7.5% - 8.5%

These figures show that mortgage costs are lower than their 2023–2024 peak, but still significantly higher than the sub-2% levels seen before 2022.

What Official Signals Say About Mortgage Rates in 2026

Mortgage rate predictions 2026 UK are driven by three measurable factors:

1. Base rate expectations

Financial markets currently expect one to two further base rate reductions during 2026, which could bring the base rate into the 3.0%-3.25% range by the end of the year, if inflation remains controlled.

2. Inflation forecasts

UK inflation has eased from double-digit levels to closer to 2.5%-3%, but remains above target. The Bank of England has stated it will avoid aggressive cuts until inflation is firmly anchored.

3. Swap rates and lender funding

Fixed mortgage rates are linked to swap rates, which already reflect expectations of future base rate changes. This is why many fixed deals improved slightly before the December 2025 base rate cut.

Fixed Mortgage Rate Predictions for 2026

Based on current data, fixed mortgage rates in 2026 are expected to decline slowly, rather than fall sharply.

If current trends continue, fixed rates may gradually move closer to:

5-year fixed rates could move towards 3.5%-3.8% by late 2026
2-year fixed rates may remain higher due to short-term uncertainty
Product fees will continue to play a larger role in overall borrowing cost

This means borrowers may see modest improvements, but not a return to historically low pricing.

Variable and Tracker Mortgage Outlook

Variable and tracker mortgages respond directly to base rate changes. If the base rate falls from 3.75% to around 3.25% during 2026, borrowers on trackers could see their monthly repayments reduce accordingly.

For example:

A £250,000 tracker mortgage could fall by £60-£80 per month if rates drop by 0.5%
Borrowers remain exposed if inflation rises again

Buy-to-Let Mortgage Rates in 2026

Buy-to-let mortgages typically sit 0.5%-1% higher than residential rates. At the start of 2026, average buy-to-let rates are typically priced around:

Product	Typical Rate
2-year fixed BTL	4.8% - 5.3%
5-year fixed BTL	4.4% - 4.9%

Mortgage rate predictions 2026 UK for landlords suggest stabilisation rather than reductions.

What This Means for Buyers and Homeowners

For buyers:

Mortgage affordability is improving compared to 2024
Stress tests still assume rates of 7%-8%
Borrowing power remains tighter than pre-2022 levels

For remortgagers:

Many fixed deals ending in 2026 will still reset higher than historic rates
Early product reviews may help secure better pricing

For landlords:

Higher borrowing costs must be balanced against rental income
Long-term fixes offer stability in a slowly easing market

Mortgage Rate Predictions 2026 UK

The data suggests that 2026 will be a year of controlled easing, not dramatic cuts. Mortgage rates are expected to trend downward slowly, supported by falling inflation and monetary policy.

Borrowers should plan around:

Rates are settling into a 3%-4% base rate environment
Fixed mortgage rates are stabilising above historic lows
Careful affordability planning rather than timing the market

How Cribs Estates Can Help

Cribs Estates supports buyers, homeowners, and landlords by combining local market insight with realistic affordability planning.

If you are buying, remortgaging, or investing in 2026 and want guidance that reflects current mortgage conditions and local property trends, our team is here to help you move forward with confidence.

Call us today for a free consultation.

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Mortgage Rate Predictions 2026 UK: What Borrowers Should Expect

Over the past few years, mortgage rates have been a major concern for buyers, homeowners, and landlords. As we move through early 2026, many are asking what direction rates are likely to take and how this could affect borrowing decisions. This blog explains mortgage rate predictions 2026 in the UK using official economic signals.Where UK Interest Rates Stand in Early 2026As of January 2026, the Bank of England base rate stands at 3.75%, following a reduction in December 2025. This was the first cut since rates peaked above 5% during the inflation cycle.This shift reflects:Inflation is falling closer to the Bank of England’s 2% targetSlower wage growth compared to 2023–2024Reduced pressure on household borrowingAlthough one cut has already taken place, the Bank has confirmed that future changes will remain data-dependent, not automatic.Current Mortgage Rates at the Start of 2026At the beginning of 2026, commonly available mortgage rates across UK lenders typically fall within the following ranges:Mortgage TypeTypical Rate Range2-year fixed (75% LTV)4.2% - 4.6%5-year fixed (75% LTV)3.9% - 4.3%Tracker mortgagesBase rate + 0.5% to 1.0%Standard variable rate (SVR)7.5% - 8.5%These figures show that mortgage costs are lower than their 2023–2024 peak, but still significantly higher than the sub-2% levels seen before 2022.What Official Signals Say About Mortgage Rates in 2026Mortgage rate predictions 2026 UK are driven by three measurable factors:1. Base rate expectationsFinancial markets currently expect one to two further base rate reductions during 2026, which could bring the base rate into the 3.0%-3.25% range by the end of the year, if inflation remains controlled.2. Inflation forecastsUK inflation has eased from double-digit levels to closer to 2.5%-3%, but remains above target. The Bank of England has stated it will avoid aggressive cuts until inflation is firmly anchored.3. Swap rates and lender fundingFixed mortgage rates are linked to swap rates, which already reflect expectations of future base rate changes. This is why many fixed deals improved slightly before the December 2025 base rate cut.Fixed Mortgage Rate Predictions for 2026Based on current data, fixed mortgage rates in 2026 are expected to decline slowly, rather than fall sharply.If current trends continue, fixed rates may gradually move closer to:5-year fixed rates could move towards 3.5%-3.8% by late 20262-year fixed rates may remain higher due to short-term uncertaintyProduct fees will continue to play a larger role in overall borrowing costThis means borrowers may see modest improvements, but not a return to historically low pricing.Variable and Tracker Mortgage OutlookVariable and tracker mortgages respond directly to base rate changes. If the base rate falls from 3.75% to around 3.25% during 2026, borrowers on trackers could see their monthly repayments reduce accordingly.For example:A £250,000 tracker mortgage could fall by £60-£80 per month if rates drop by 0.5%Borrowers remain exposed if inflation rises againBuy-to-Let Mortgage Rates in 2026Buy-to-let mortgages typically sit 0.5%-1% higher than residential rates. At the start of 2026, average buy-to-let rates are typically priced around:ProductTypical Rate2-year fixed BTL4.8% - 5.3%5-year fixed BTL4.4% - 4.9%Mortgage rate predictions 2026 UK for landlords suggest stabilisation rather than reductions.What This Means for Buyers and HomeownersFor buyers:Mortgage affordability is improving compared to 2024Stress tests still assume rates of 7%-8%Borrowing power remains tighter than pre-2022 levelsFor remortgagers:Many fixed deals ending in 2026 will still reset higher than historic ratesEarly product reviews may help secure better pricingFor landlords:Higher borrowing costs must be balanced against rental incomeLong-term fixes offer stability in a slowly easing marketMortgage Rate Predictions 2026 UKThe data suggests that 2026 will be a year of controlled easing, not dramatic cuts. Mortgage rates are expected to trend downward slowly, supported by falling inflation and monetary policy.Borrowers should plan around:Rates are settling into a 3%-4% base rate environmentFixed mortgage rates are stabilising above historic lowsCareful affordability planning rather than timing the marketHow Cribs Estates Can HelpCribs Estates supports buyers, homeowners, and landlords by combining local market insight with realistic affordability planning.If you are buying, remortgaging, or investing in 2026 and want guidance that reflects current mortgage conditions and local property trends, our team is here to help you move forward with confidence.Call us today for a free consultation.

Stamp Duty Buy-to-Let Landlords Need to Pay in 2026

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