The Bank of England has delivered an early Christmas present to some homeowners, as the base rate was cut from 4% to 3.75% on Thursday.<\/p>\n
The average homeowner on a tracker mortgage will see their monthly payments reduce by nearly \u00a329 as a result of the Bank of England chopping a quarter point off the base rate, analysis has found.<\/p>\n
UK Finance said that, based on outstanding balances, the average tracker borrower will see their monthly repayments reduce by \u00a328.77.<\/p>\n
The average homeowner on a standard variable rate (SVR) mortgage will see their monthly payments fall by \u00a313.88, based on typical outstanding balances and assuming that the base rate cut is passed on in full.<\/p>\n
Lenders set their own SVRs but in practice they often follow the movements of the Bank of England base rate.<\/p>\n
Around 533,000 homeowner tracker mortgages were outstanding in June 2025, as were around 509,000 SVR deals, according to UK Finance.<\/p>\n
While the cut will not immediately affect homeowners on fixed-rate mortgages, it could be good news for many of those whose deals are set to expire soon.<\/p>\n
According to UK Finance\u2019s figures, around 1.8 million fixed-rate deals are due to expire in 2026.<\/p>\n
Property professionals are now expecting the new year to start with a \u201cbang\u201d as lenders look to attract borrowers and activity returns to the housing market post-Christmas.<\/p>\n
David Hollingworth, associate director at mortgage broker L&C Mortgages, said: \u201cFixed rates have improved substantially and improved the choices for those still edging toward the end of an ultra low five-year fixed rate.<\/p>\n
\u201cLenders are competing hard and there could be more scope for lenders to improve their rates in the new year when they will want to get off to a good start.<\/p>\n
\u201cAlthough rates are already pricing in further rate cuts next year, there\u2019s still scope for market expectation to see rates drift down further.\u201d<\/p>\n
Iain McKenzie, chief executive of The Guild of Property Professionals, said: \u201cFor buyers and movers eyeing the new year, it feels like an early Christmas present.\u201d<\/p>\n
Andrew Montlake, chief executive of Coreco Mortgage Brokers, said: \u201cBorrowers will be celebrating some early Christmas cheer.\u201d<\/p>\n
He added: \u201cToday\u2019s cut will have the knock-on effect that mortgage rates look certain to decrease slightly and kick off a mortgage melee in the new year.\u201d<\/p>\n
Nathan Emerson, chief executive of property professionals\u2019 body Propertymark, said: \u201cThere is real potential for lenders to support first-time buyers with more focused products to help uplift the market over the coming weeks and months.\u201d<\/p>\n
Jason Tebb, president of OnTheMarket, said: \u201cWith\u00a0the Budget now out of the way, the atmosphere of uncertainty has\u00a0lifted and\u00a0this rate cut delivers a real\u00a0pre-Christmas boost for the housing market which bodes well for activity in the new year.\u201d<\/p>\n
Story Continues <\/p>\n
Ed Monk, pensions and investment specialist at Fidelity International, said: \u201cA rate cut to end the year is an early holiday gift for borrowers \u2013 and there\u2019s reason to hope that more cuts will arrive in 2026.\u201d<\/p>\n
He added: \u201cMarkets are pricing in one further quarter-point cut in the first half of 2026 but the picture beyond that is less certain.<\/p>\n
\u201cHowever, the chances of a second cut next year are increasing.\u201d<\/p>\n
Matt Smith, a mortgage expert at Rightmove, said: \u201cThe financial markets and mortgage lenders have been expecting today\u2019s (Bank of England base rate) cut for a while, and therefore responded early with mortgage rate cuts in December to round off the year.\u201d<\/p>\n
He added: \u201cIt does mean we could now see a fresh round of rate cuts in the new year as lenders look to start the new year with a bang.<\/p>\n
\u201cHome movers are likely to see the most notable rate drops for two-year fixed products rather than five, and next year we expect the gap between two-year and five-year deals to grow.\u201d<\/p>\n
Nicky Stevenson, managing director of Fine & Country, said: \u201cLower rates, combined with a more benign Budget backdrop, are likely to translate into stronger inquiries and transactions in the new year.\u201d<\/p>\n
Mark Manning, managing director of Northern Estate Agencies Group, said: \u201cI expect 2026 to start with a flurry of activity as mortgage rates become even more competitive and people use the festive period to start planning their next move.\u201d<\/p>\n
The fall in the base rate could also spell more meagre returns for some savers, who also need to bear in mind the eroding impact of inflation on their cash.<\/p>\n
Office for National Statistics (ONS) figures released earlier this week showed Consumer Prices Index (CPI) inflation was at 3.2% in November, slowing from 3.6% in October.<\/p>\n
Paul Broadhead, head of mortgage and housing policy at the Building Societies Association, said: \u201cFalling rates, combined with the pending changes to savings taxation, will be felt by those working hard to build financial resilience and save for their future, including those saving for a first-home deposit.\u201d<\/p>\n
According to Moneyfactscompare.co.uk, the average easy access savings rate on the market has fallen from 2.96% in December 2024 to 2.54% in December 2025, while the average easy access Isa rate on the market has decreased from 3.16% to 2.73% over the past year.<\/p>\n
Over the same period, the average notice account rate on the market has fallen from 4.10% to 3.50% and the average notice Isa rate has decreased from 3.97% to 3.40%.<\/p>\n
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: \u201cSavers with the most flexible pots are hit the hardest by cuts to the Bank of England base rate as providers use this as a signal to reduce variable rates.\u201d<\/p>\n
She added: \u201cIt can take a couple of months for the savings market to catch up to rate cuts, so it\u2019s vital savers check the latest rates and switch if they are now getting a paltry rate.\u201d<\/p>\n
Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group, said: \u201cIt\u2019s sensible to keep some easy-access cash for everyday needs and emergencies, but once that\u2019s covered, relying on cash alone might not be enough.<\/p>\n
\u201cLooking at longer-term options \u2013 such as pensions, which remain one of the most tax-efficient ways to save, or other investments \u2013 can help your money work harder, protect its value, and support your financial security as the interest rate landscape shifts.\u201d<\/p>\n
The value of investments can go down as well as up but investments can sometimes outperform cash savings over the longer term.<\/p>\n","protected":false},"excerpt":{"rendered":"The Bank of England has delivered an early Christmas present to some homeowners, as the base rate was…\n","protected":false},"author":2,"featured_media":640316,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5008],"tags":[936,177366,748,393,4884,8671,6792,197062,197061,16,61021,15],"class_list":{"0":"post-640315","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-england","8":"tag-bank-of-england","9":"tag-bank-of-england-base-rate","10":"tag-britain","11":"tag-england","12":"tag-great-britain","13":"tag-mortgage-rates","14":"tag-mortgages","15":"tag-property-professionals","16":"tag-tracker-mortgage","17":"tag-uk","18":"tag-uk-finance","19":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115740876954009684","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/640315","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=640315"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/640315\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/640316"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=640315"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=640315"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=640315"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}