Many homeowners and prospective buyers are starting the year with a bit more optimism around borrowing costs. After a period of rising interest rates, lenders have begun to trim mortgage pricing in response to Bank of England base rate cuts and growing competition in the market.
In December 2025, the Bank of England lowered its base rate to 3.75%, and that decision is now feeding through into the terms borrowers can access. Lloyds Bank Major lenders including HSBC and Nationwide have already reduced residential mortgage rates for new and remortgage customers in early 2026, signalling that the cost of borrowing is easing after a sustained period of higher pricing.
While headline averages still sit above their long-term lows, there’s reason for cautious optimism:
- Average fixed rates have drifted lower, and many lenders are now competing aggressively for business – particularly for borrowers with strong deposits.
- Some of the best available two- and five-year fix deals are now materially cheaper than they were a year ago, with market watchers anticipating further movement as the year progresses.
- Even so, actual rates vary widely depending on loan amount, deposit size and product type, so headline figures are less important than the deal you can secure for your circumstances.
For anyone looking to remortgage or buy a home this year, this evolving backdrop creates both opportunities and questions. Locking in a competitive fixed rate now can provide certainty over monthly costs, but borrowers should also consider the possibility of further reductions later in 2026 – and factor that into the timing of their decisions.
Regardless of where you are in your property journey, expert advice can make a meaningful difference. As part of the Insight group of companies, Insight Private Finance have over 20 years of specialist mortgage experience and will work closely alongside your financial adviser to find solutions tailored to your personal circumstances. This joined-up approach helps ensure your mortgage not only works today but also fits comfortably within your wider financial plan.
Sources:
https://www.theguardian.com/business/2026/jan/04/hsbc-first-big-uk-lender-cut-mortgage-rates-2026
https://www.mpamag.com/uk/mortgage-industry/market-trends/fixed-mortgage-rates-lowest-since-2022-mini-budget/559245
https://www.forbes.com/uk/advisor/personal-finance/2025/12/18/inflation-rate-update/
https://hoa.org.uk/advice/guides-for-homeowners/for-owners/mortgage-rate-forecast/