It has been a bit of a rocky road for interest rates over the past few years, and all the UK public want is to know if there’ll be some stability, or whether mortgage rates will keep coming down.
Make sure to keep your own situation in mind when reading this article, as it may help you make sense of what’s happening in the UK.
What is a Mortgage Interest Rate?
A mortgage interest rate, put simply, is an agreement between you and the lender for how much interest you’ll pay for your property on top of the original property price. This is why, when you borrow money for a mortgage, they need to make sure you can repay the total cost of ownership, not just the property value.
What is the Current Bank of England Base Rate?
In England and the UK right now, the current Bank of England base rate is 4% (October 2025). This is a 0.75% change since the start of the year, where the base rate was 4.75%.
The reason it has been so volatile this year is due to trying to combat the high rate of inflation and the rapid changes in the economy. With things like energy bills, supply chain issues, and many more, inflation was getting very difficult to handle for the general public, so it’s in response to this.
What Affects Mortgage Rates Changing?
There are so many different reasons as to why mortgage rates change, but these are the most common reasons:
* The State of the Economy
If the economy is doing well, people are more likely to borrow money, which could lead to higher demand for mortgages, and this in turn leads to lower mortgage rates as lenders become more competitive.
However, if the economy is doing poorly, people are less likely to borrow money, which could lead to lower demand for mortgages and higher or stagnant mortgage rates. Lenders also change their rates in line with keeping their service levels on target.
* The Housing Market
If the housing market is doing well, house prices will go up, which could lead to higher demand for mortgages and again lower mortgage rates.
However, if the housing market is doing poorly, house prices will go down, which could lead to lower demand for mortgages and again higher or stagnant mortgage rates.
* The Government's Policies
The government can also affect mortgage rates through its policies. For example, the government could introduce a scheme to help first-time buyers, which could lead to higher demand for mortgages and lower mortgage rates.
Will Mortgage Rates Continue to Go Down Going Into 2026?
As for whether mortgage rates will continue to drop in 2026, this is what the Bank of England has to say "At the end of the day, if we have lower interest rates, that means cheaper mortgages, leading to a higher affordability rate. Thus, in today’s blog, we’re going to talk a bit about interest rates, what we think will happen in the future, and how it can affect you."
Thus, we can’t say for certain that interest rates will drop even further, but that is the goal. If we go in line with current market forecasts, we could see it drop to 3.75% or even 3.5% in 2026, but as we said, this is based on past trajectory, and we cannot accurately predict the future.
How Do Changing Mortgage Rates Affect You?
Typically, a mortgage rate change will affect you, no matter who you are, but how it affects you directly will depend on the mortgage type that you have specifically. Below breaks down exactly how—whether mortgage rates go up or down—will affect your specific type of mortgage:
Note: There are many ways to mortgage your home, and what is right for you may not be right for someone else. Always make sure to speak with an expert to see what their opinion is one what the best mortgage type is for your unique circumstances.
What is the Future of Mortgage Interest Rates?
Ultimately, it is difficult to say for sure which way rates will go over the coming months and years in the UK. The Bank of England's interest rate decisions, the state of the economy, the housing market, and the government's policies are all factors that could affect mortgage rates.
If you’re seeing the dropping interest rates and you’re looking to buy your first home, or remortgage, Bell Financial Solutuons are fortunate enough to have 5-star reviews from all of our brilliant customers over the years who trust us as their independent mortgage broker.
Thus, if you want to get in touch with us today, you can either call 0161 791 4757 or use our contact form. We look forward to hearing from you!
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