Intermediary outlines expectations for next year’s rates and borrowing
With inflation easing and Bank of England base rate cuts appearing to be under way, a mortgage intermediary network expects a more settled environment for borrowers in 2026, but warns that outcomes will still depend on the wider economic picture.
Mortgage Advice Bureau (MAB) has set out its view on how interest rates and product availability may develop next year, and what this could mean for homeowners and first-time buyers.
“The economy in 2025 ended up being tougher than many predicted,” said Rachel Geddes (pictured top), strategic lender relationship director at Mortgage Advice Bureau. “However, with inflation now gently easing off, and interest rates on the decline, homeowners can finally have some breathing room after the rollercoaster ride of the previous two years.”
Rate trajectory: base rate expected to move lower
While emphasising that future monetary policy cannot be forecast with certainty, MAB said it expects the direction of travel to remain downward in 2026 if economic data co-operate. “We’re fairly confident that we’ll continue to see interest rates fall as we go through the course of 2026,” Geddes said.
She noted that many market participants anticipate the Bank of England base rate settling in a band between 3.25% and 3.5%, though timing will depend on how growth, inflation and labour market figures evolve.
Geddes also highlighted the volume of borrowers whose ultra-low fixed rates are due to mature next year, placing a premium on early engagement and careful affordability assessment.
Refinancing pressures and changing borrower profiles
As a wave of fixed rate products taken out during the low-rate era comes to an end, MAB expects a significant cohort of customers to encounter higher monthly payments.
Many of these borrowers, Geddes suggested, will also have more complex circumstances than when they last applied. She pointed to clients who may now need to raise additional funds, have smaller deposits than they would like, or have experienced credit issues in recent years.
“With many historically low fixed rate deals expiring next year, now is the time to get mortgage advice, especially if your circumstances have changed,” she said.
Post‑Budget environment and homeownership prospects
Following the recent Autumn Budget, Geddes acknowledged that the sector had hoped for more direct housing measures from the Chancellor. However, she argued that several fundamentals have nonetheless moved in a more supportive direction for purchasers, including improved affordability metrics, gentle declines in mortgage pricing and a broad product range.
“There’s no denying that the Chancellor could’ve announced more for the housing industry than she did,” Geddes said. “However, what we now have is certainty, improved affordability, falling mortgage rates, and a record number of mortgage products to choose from.”
For intermediaries, a key message is that some potential buyers who believe ownership is unattainable may, in practice, be closer to a workable solution than they assume once income, expenditure and product options are reviewed in detail.
First-time buyers: wider choice and higher potential borrowing
MAB also points to a more favourable backdrop for first-time buyers than in recent years, driven by new product launches and shifts in some lenders’ underwriting approaches.
“With new products entering the market and recent changes to lending regulations that allow you to potentially borrow more, the pool of options available to first-time buyers is now far bigger,” said Geddes, strategic lender relationship director at Mortgage Advice Bureau. “This is great news for anyone who doesn’t believe they can get a mortgage, or has been previously declined for one.”
Geddes added that many renters may underestimate how close they are to being able to buy, given changes in affordability, income multiples and product design. She suggested that in some cases it may now be possible to secure a higher loan amount than would have been available a year earlier, potentially bringing forward purchase timelines.
Importance of advice in a changing rate cycle
Against this backdrop, MAB continues to stress the role of timely, holistic advice. According to Geddes, early conversations can help clients understand their options, whether they are seeking to buy their first property, refinance an existing loan or review protection needs alongside their mortgage.
“Speaking to an adviser sooner rather than later is key to getting to where you want to be - whether that’s buying your first home, remortgaging to a better deal, or protecting your family with the right insurance policy,” she said. “You never know, you may well be able to achieve something that you thought was impossible.”
For brokers, this also underlines the need to identify customers approaching product maturity, test their affordability under different scenarios and engage early with lenders as the rate cycle evolves.
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