A rate cut could be a boon for borrowers who act now
UK borrowers are poised for a pivotal week as the Bank of England prepares for what Oxford Economics has described as a likely “knife-edge vote” on interest rates on Thursday.
Inflation slowed sharply in November, increasing expectations that the Bank of England will cut the base rate at its meeting tomorrow. Economists are widely forecasting a reduction from 4% to 3.75%, with another cut anticipated in the first quarter of 2026 and a likely floor around 3.5%.
Against this backdrop, one broker says the coming move should be seen as a genuine inflection point for the mortgage market – but warns borrowers not to expect a rapid return to the ultra‑low rate era.
‘A genuine turning point’ – but not a return to old norms
Akhil Mair, managing director at Our Mortgage Broker Limited, expects the Bank of England’s rate cut to act as a “genuine turning point in the cycle”, while stressing that progress from here will be “modest and gradual”.
He believes the market is now clearly shifting away from its peak, but cautions that overall pricing will remain elevated compared with what many borrowers have grown used to over the past decade.
“This is not a reset back to rock-bottom rates – borrowers need to calibrate expectations to a higher-for-longer world, even as conditions slowly improve.”
Act now versus wait and see
Mair’s core strategic message to borrowers due to refinance or purchase in the near term is unambiguous: those within a six‑month window should move quickly to secure a rate rather than wait for further cuts.
He points out that fixed mortgage rates are already priced on forward expectations, meaning that much of the anticipated easing has been baked into current deals.
“I strongly advise clients due to remortgage or purchase within the next six months to secure a rate immediately. Fixed rates are already priced on future expectations, and waiting risks losing out on the best initial deals,” he said.
The risk, he argues, is that borrowers tempted to sit tight in the hope of visibly lower headline rates later could find that market volatility, product withdrawals or a shift in swap rates leave them worse off – particularly those on tighter affordability margins or nearing the end of a competitive fixed rate.
Variable and shorter fixes come back into play
As a downward trend in the base rate becomes more firmly established, Mair expects to see growing appetite for variable, tracker and discounted products, especially among borrowers with stronger financial resilience.
“There is increasing scope for variable and discounted products as the downward trend becomes established,” he explained. “Borrowers, especially those with greater financial comfort, will seek these products to benefit immediately from continued cuts.”
He also anticipates a swing back towards shorter‑term fixes, with two‑year products regaining ground they ceded to five‑year deals during the height of rate volatility. For many borrowers, the ability to reprice sooner if conditions improve further will become a key attraction.
“Shorter‑term fixes, particularly two‑year deals, are likely to rise in popularity. People will want the flexibility to reposition if the rate environment looks materially better in a couple of years’ time,” he added.
6–12 month outlook: First-time buyers to re‑emerge
Over the next 6–12 months, Mair expects a noticeable improvement in sentiment and activity across the residential market, led by first-time buyers who have been sidelined by higher borrowing costs and tougher stress tests.
“Residential activity and confidence are likely to see a renewed surge, particularly from first-time buyers re‑entering the market,” he said.
For many would‑be buyers, even modest improvements in affordability – combined with stabilising prices in some regions – could be enough to tip the balance back in favour of purchasing, especially if they see further cuts on the horizon and a sense that the worst of the rate shock has passed.
Buy-to-let: from survival mode to portfolio building
Mair is also cautiously upbeat about the buy-to-let (BTL) sector, which has weathered intense pressure from higher rates, stricter stress testing and evolving tax treatment.
He believes that as the base rate edges down towards the mid‑3% range and mortgage pricing follows, more investment cases that had become marginal or unviable at peak rates will once again start to stack up.
“The buy-to-let market will become more viable and attractive,” he said. “I anticipate a return of portfolio building and increased remortgaging as rates fall below critical affordability thresholds.”
As affordability metrics ease, Mair expects portfolio landlords in particular to revisit shelved acquisition plans, refinance onto sharper deals, and restructure debt to improve cashflow and release capital for further investment.
A turning point, not a gear change
Overall, Mair characterises the anticipated Bank of England move as both a psychological and practical shift for the mortgage market – a signal that the tightening phase has peaked and a new chapter is beginning.
However, he is keen to temper any notion of a dramatic gear change. The coming months, he argues, will be defined by gradualism: slow, measured cuts, a step‑down from peak stress, and a recalibration towards a still‑elevated but more sustainable rate environment.
“Borrowers who act early, take advice and structure their borrowing intelligently will be best placed to benefit as the new phase of the cycle unfolds,” concluded Mair.
