Current UK mortgage rates and expected rates in 2026

December 29, 2025

The UK property market is in a good position ahead of the new year, and investors are looking at how to get ahead of the market in 2026. A key part of that is understanding mortgage costs now and in the future, so you get the best deal possible when you buy UK investment property.

Read on to learn about mortgage costs now, what might affect them in the future and the forecast for 2026.

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What are mortgage costs in Q4 2025?

The Bank of England has made multiple cuts to the base rate of interest this year. The rate stands at 4.00% now compared to…

4.75% in December 2024
5.25% in December 2023

That has caused mortgage rates to fall to the lowest rate in three years. The average residential mortgage rates in December 2025, according to Rightmove, are now…

4.35% - 2-year fixed rate
4.39% - 5-year fixed rate

The very lowest rates on the market currently are…

3.55% - 2-year fixed rate
3.72% - 5-year fixed rate

*These figures are based on a survey of 95% of the mortgage market at the time of writing. They do not include ‘tracker’ mortgages, which rise and fall with the base rate of interest.

The average buy-to-let mortgage rate is slightly higher than the average residential mortgage rate. This is because lenders take on more risk with a buy-to-let mortgage. For example, adding a tenant to the equation introduces an additional risk factor compared to a homeowner paying their own mortgage.

However, the average rate is still under 5%, compared to over 6% a year ago, according to Which?. That represents a major saving for buy-to-let landlords and shows that borrowing to invest is a much cheaper prospect now than it was a year ago.

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What might affect mortgage costs in the future?

The base rate is the main factor determining mortgage rates in the future because lenders use it to price their fixed rates. It is anticipated that there will be two further rate cuts in the next 12 months:

December 2025 – Cut to 3.75%
First half of 2026 – Cut to 3.5%

And the markets believe that it is even possible that there will be an additional third cut by the end of 2026. That is due in part to the government’s November 2025 Budget, which delivered measures to reduce inflation by 0.4%.

Inflation has also fallen to 3.6% and estimates show that it could be as low as 2.5% by the end of 2026. If that comes to pass, mortgage rates could fall even further than forecast.

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Mortgage rate forecast for 2026

With all that in mind, we can expect mortgage rates to fall slightly in 2026, adding to the savings seen in 2025. Lenders have already ‘priced in’ some cuts to the base rate, so the current average mortgage rate will not fall significantly based on the pure numbers.

However, if one lender cuts their rates further in the first half of 2026 to try and secure more business, others will follow. That will cause mortgage rates across the residential and buy-to-let markets to fall – perhaps to 4% again in the next 12-18 months if circumstances are favourable.

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Off-plan buy-to-let property can lead to mortgage savings

Lower mortgage rate forecasts for the future make this a perfect time to secure your off-plan buy-to-let property. By doing so, you can secure your ideal investment property at today’s market rates and pay in the future when mortgage rates are lower – saving even more money.

Discover our latest off-plan buy-to-let investment opportunities today and contact our team of expert advisors for more information!

We always recommend you talk to an independent mortgage broker before making any decisions, but part of that discussion means having as much information as possible.

Current UK mortgage rates and expected rates in 2026

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