The Bank of England’s December 2025 interest rate cut marked another step away from the peak borrowing costs of the last two years. While rates are still higher than the ultra-cheap era many of us remember, the direction of travel is now much clearer.
Here’s what the latest cut means, where that leaves us in 2026, what mortgage deals look like right now and how individuals and couples can prepare to buy or sell property over the year ahead.
The December 2025 interest rate cut – the bigger picture
The December cut was the latest in a small series of reductions during 2025, following a long period where the Bank of England held rates steady to bring inflation under control.
The key points are that:
- Recent trends indicate interest rates are no longer increasing
- Rate cuts are happening, but slowly and cautiously
- We are not heading back to near-zero rates anytime soon
This matters because mortgage pricing is influenced as much by expectations of future rates as by the base rate itself. This sense of cautious reduction in interest rates is a careful balance between managing the economy and managing inflation.
Where does that leave rate cuts so far?
Through 2025, rate reductions happened in small steps rather than dramatic drops. The Bank of England has been clear it wants to avoid cutting too fast and reigniting inflation.
Lenders had already priced in these expectations months earlier, meaning:
- Many mortgage deals were improving even before December
- Borrowers have started to feel real, tangible benefits
The environment for homebuyers and home-movers is now noticeably more stable than it was just a year ago.
What’s expected for 2026?
Current market expectations point to:
- Further modest rate cuts in 2026, rather than sharp falls
- A ‘new normal’ where base rates settle higher than pre-2020 levels
- Mortgage rates becoming more stable and predictable
In practical terms:
- Mortgage rates may drift down in small, steady steps
- Volatility should reduce compared to the last few years
- Lenders are likely to compete more aggressively on pricing
- For buyers, sellers and anyone remortgaging, this means it’s now much easier to plan your next steps
What mortgage deals are available now?
Mortgage pricing has improved noticeably compared to 12–18 months ago.
Fixed-rate deals are more competitive, especially at 2- and 5-year terms, we’re seeing:
- Five‑year fixes appealing to buyers wanting long-term certainty
- Two‑year fixes chosen by those anticipating further rate drops
- More affordability flexibility from lenders
- A wider choice of products for first-time buyers, movers and re-mortgagers
What this means for buyers in 2026
If you’re planning to buy in the next 6–12 months:
1. Affordability is improving
Lower rates mean borrowing power is gradually increasing, which helps first-time buyers and movers alike
2. Competition may return
As confidence improves, more buyers will re-enter the market. That can mean more competition for good properties
3. Preparation matters more than timing
Getting ‘’mortgage‑ready’ is more important than trying to predict rate bottoms
What you should do now:
- Get a mortgage Agreement in Principle early
- Review your credit profile
- Build a realistic budget that works even if rates don’t fall much further
What this means for sellers
For sellers, improving mortgage affordability is positive news.
You can expect a larger pool of active buyers, with fewer sales falling through due to mortgage issues and gradually improving confidence. However, price growth is likely to remain modest and buyers are still value-conscious and well-informed.
Seller preparation tips:
- Avoid overpricing – today’s buyers are well‑informed
- Make sure your onward mortgage options are clear
- Be ready to move when the right offer appears
Homeowners coming to the end of a fixed deal
If you’re coming off a fixed rate in 2026:
- You’re likely to remortgage at a lower rate than those rolling off in 2023–24
- But payments may still be higher than your original deal
Action points:
- Start reviewing options 6 months before your deal ends
- Don’t default to your lender’s standard variable rate
- Consider your risk comfort when choosing between fixing or a variable rate
How couples and individuals can prepare for the year ahead
Whether buying, selling or remortgaging, preparation is key.
Financial preparation:
- Stress-test your budget at slightly higher rates
- Reduce unsecured debt where possible
- Build a buffer for moving costs and rate changes
Strategic preparation:
- Be clear on your timeframes
- Understand how rate choices affect long-term plans
- Get advice early, not after you’ve found a property
Summary
- The December 2025 cut confirms that rates are trending downward, but gradually
- Mortgage deals are already improving and competition between lenders is increasing
- 2026 looks more stable, predictable and buyer-friendly than the last two years
- Preparation and good advice matter more than ever
Daniel Mumford the Managing Director of Grange Mortgage & Protection Services Ltd stated that “conditions look a lot more favourable over the next 12 months, with increased competition and improving interests rate, but if the last 36 months have taught us anything, the world can be an unpredictable place and as such if the opportunity ever exists to secure a new mortgage deal at todays terms, that would always be advisable. However with a view if things do improve you can still take advantage of them, which is a concept we are happy to assist with and could prove really valuable if market conditions ever changed for the worse”.
Navigating the mortgage market is easier with expert support. That’s where the Police Mutual mortgage advice service – provided by Grange Mortgage & Protection Services Ltd, comes in, supporting serving and retired Police Officers, Staff and their families by helping them find the right mortgage deal by providing:
- Fee-free, impartial mortgage advice
- Access to thousands of mortgage deals across the market
- Specialist support for complex income, shift‑based pay and police‑specific needs
- Help with first‑time buys, home moves and remortgages
- A dedicated adviser throughout the process
Whether you want to understand your borrowing potential, secure a competitive rate, or plan-ahead for later in the year, the mortgage advice service can help you make confident, informed decisions.
Important things you need to know
PMGI Limited, trading as Police Mutual, has chosen Grange Mortgage & Protection Services Ltd to provide customers with a mortgage advice service. Grange Mortgage & Protection Services Ltd will provide you with independent mortgage advice and make a recommendation based on your circumstances and requirements. You will not receive advice or any recommendation from Police Mutual.
If you take out a mortgage recommended by Grange Mortgage & Protection Services Ltd, PMGI Limited will receive a fee for the introduction which is a percentage based on the loan amount. We may also earn an additional fee based on performance of our account. If you wish to know the fee we receive please contact Grange Mortgages.
Grange Mortgages & Protection Services Ltd, is an Appointed Representative of PRIMIS Mortgage Network, a trading name of Advance Mortgage Funding Ltd. Advance Mortgage Funding Ltd is authorised and regulated by the Financial Conduct Authority.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.










