Bank of England base rate decision: expert mortgage insight and what it means for borrowers in 2026

The Bank of England (BoE) is expected to announce today that the base rate will fall below 4%, meaning the base rate will be below 4% for the first time since February 2023. Following Rachel Reeve’s budget at the end of November, and now a BoE base rate reduction, how will homeowners and new home buyers be affected as we head toward 2026? 

In the lead-up to the Bank of England’s final meeting of the year, John Fraser-Tucker, Head of Mortgages at award-winning mortgage broker, Mojo Mortgages, suggests that while a 0.25% cut to 3.75% is the outcome many are banking on, the real story lies in how lenders have already begun to move. 

Fraser-Tucker notes that we are seeing a shift from the caution of late autumn toward a more competitive spring outlook. “Lenders are essentially ‘pricing in’ this anticipated drop,” he explains. “For those looking at remortgaging in early 2026, the market is beginning to show more appetite, but it’s a delicate balance. Even a small base rate reduction acts as a vital catalyst for affordability, potentially releasing a wave of pent-up demand from buyers who have been sitting on the fence while rates hovered at 4%.”

For homeowners currently navigating this volatility, Fraser-Tucker emphasises that timing no longer has to be a gamble. He points out that many borrowers hesitate to lock in a deal, fearing they might miss out if the Bank of England cuts rates further while their application is in progress. To mitigate this, Mojo utilises its Rate Check Promise service; once a customer has secured an offer, the lender’s rate is checked automatically every day. If that same lender drops the price for that specific deal before completion, Mojo can often move the customer onto the lower rate. This allows borrowers to secure a “safety net” rate now, with the organic reassurance that if the market improves following the December announcement, they aren’t left behind on a more expensive product.

Summary of Market Impact

Expected impact of a 0.25% cut according to John Fraser-Tucker and his team;

First Time Buyers (FTBs): 

FTB’s will see Improved “stress test” affordability, potentially increasing borrowing power. In this sense 2026 is looking up for first time buyers. 

Fixed-rate mortgages: 

Fixed rate mortgages have already seen a reduction. For example, the average 2-year fixed rate has fallen from 4.5% to 4.3% and the average 5-year fixed rate has dropped from 4.4% to 4.2%. 

This shows that rate pricing is reflective of broader economic conditions and that those who are set to remortgage or buy their first home soon are likely to secure a more favourable mortgage rate than they would have at the start of the year.  

Tracker mortgages:

Borrowers on tracker mortgages, which are directly linked to the base rate, will see an almost immediate reduction in monthly payments.

Remortgagers: 

For remortgagers coming up for renewal in the next 6 months, more competitive fixed-rate deals are likely to emerge in Q1 2026. This is where Rate Check Promise comes to light and can save customers hundreds, if not thousands of pounds in the long run (see Mojo Mortgages Rate Check Promise service for more details). 

Standard Variable Rate (SVR) mortgages:

While lenders are not obligated to adjust SVRs in line with the base rate, many may choose to keep them steady, offering consistency for borrowers. The current average SVR rate is 7.49%

Average Fixed Mortgage Rates: Dec vs Nov 2025

The following table illustrates how average fixed rates have trended in the month leading up to the December 18th base rate decision.

John Fraser-Tucker gives final key market observations for the year: 

“The 0.19% drop in 2-year fixed rates suggests lenders have already adjusted for the expected base rate cut, meaning we may not see a massive secondary drop immediately after the announcement.”