Advisers urge caution as borrowers await key policy decision
The UK mortgage market is bracing for the Bank of England’s closely watched monetary policy decision today, with brokers interviewed by Mortgage Introducer expecting the base rate to remain unchanged at 4%.
While recent data has pointed to easing inflation and a cooling labour market, uncertainty around the government’s forthcoming Budget and broader economic conditions has led advisers to counsel caution and flexibility for borrowers.
“I expect the Bank of England to hold rates at 4%,” said Craig Fish (pictured top left), managing director at Lodestone Mortgages and Protection. “While the economic picture looks a touch brighter, there’s still far too much uncertainty surrounding the upcoming Budget. Until we know the full fallout, I can’t see the MPC rocking the boat. Cuts are far more likely early in 2026, once the economic dust settles.”
Sam Rose (pictured top centre), director at TR Financial, echoed this sentiment, noting the unpredictability of the bank’s decisions. “It is always difficult to confidently predict what the Bank of England will do when it comes to the base rate,” he said. “They have often been criticised for being slow to act. However, if I was a betting man, I think that they will hold the rate.
“There was a slight (welcome) surprise with the recent more positive inflation figures. They will want to show that their slow and steady approach to cutting their rate has worked and look to delay reducing it until the new year.”
With the policy outlook finely balanced, brokers are focusing on helping clients navigate the uncertainty. “Right now, I’m helping clients focus on what they can control, not the noise,” Fish said. “Understanding the wider economy is useful, but chasing rate predictions rarely ends well.
“We look carefully at their personal goals, risk appetite, and timeframes before making any decision. The key is building a mortgage strategy that still works, whatever the bank decides on Thursday.”
Rose highlighted the importance of early planning, particularly for those approaching remortgage deadlines. “We advise clients to secure rates sooner rather than later, to avoid any potential spike in rates in the short term,” he said. “We start discussing remortgage options with our clients six months ahead of their rate expiries with the idea being that if we act now, we can get a rate in play. If rates improve, great, we have plenty of time to secure a better rate with the same or a new lender. If rates increase, then the rate we already have will continue to be available to them.”
Product choice remains a key consideration in the current environment. Fish pointed to the flexibility of tracker mortgages without early repayment charges for those expecting rates to fall, while also noting the appeal of shorter-term fixed rates for clients seeking stability. Rose observed that lenders are offering higher loan-to-income ratios to first-time buyers, but cautioned that such products are only suitable for the right clients.
David Hollingworth (pictured top right), associate director at L&C Mortgages, noted that fixed rates have already responded to the improving outlook, with lenders trimming their rates. He also highlighted the potential benefits of offset mortgages, especially if changes to cash ISA limits are announced in the Budget.
“Offset deals would look like they would be a great fit for the current environment,” said Hollingworth, who also acknowledged it may still be too soon for a cut this month. “With speculation that the cash ISA limits may be altered, an offset mortgage would be another useful option for those wanting to not only cut their mortgage cost but also build or retain some cash reserves. It’s a shame therefore that the range of offset deals has been reducing at the time when they could have made sense for more households.”
Looking ahead, brokers expect rates to ease gradually, but pointed out that the pace and scale of any reductions will depend on economic data and fiscal policy. “The general consensus is that rates will ease, but the pace depends heavily on the Autumn Budget and broader economic data,” said Fish. “If the economy weakens, cuts could come faster. If it drifts sideways, we might only see a single small reduction.”
Hollingworth added, “The likely trajectory and tone of voice from the Bank of England has been consistent. Interest rates were expected to come down and there’s scope for that to continue next year. The key questions will continue to be how quickly those cuts will feed through and where rates bottom out.”
Brokers also emphasised the importance of long-term planning and working with trusted advisers. “As always it is crucial for borrowers to work with brokers that they can trust, and who will put the time and energy towards working in a clients best interest,” Rose stressed.
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