UK Mortgage Rates 2026: Should You Fix Now or Wait?

The Bank of England has cut rates three times since their 5.25% peak, bringing the Bank Rate to 3.75%. Markets are pricing in two further cuts in 2026, suggesting a Bank Rate of around 3.25% by year end. For the 1.5 million homeowners coming off fixed deals in 2026, this creates a genuine dilemma: fix now and lock in certainty, or track rates in the hope of benefiting from further cuts?

n

The Case for Fixing Now

n

Two-year fixed rates have fallen to around 4.4% — significantly below the 6.1% peak of late 2023. For homeowners who were paying pre-crisis rates of 1.5-2%, any current fixed deal still represents a payment shock. But the direction of travel is better.

n

Locking in at 4.4% provides certainty for two years. If rates fall further, you will not benefit — but you will not be exposed to any upward surprises either. Given the genuine uncertainty about the global economic environment, that certainty has value.

n

The Case for Tracking

n

A tracker mortgage set at Bank Rate plus a margin of, say, 0.75% would currently cost 4.5% — slightly above the best fixed deals. But each Bank Rate cut of 0.25% would immediately reduce your monthly payments.

n

If two further cuts come through as markets expect, a tracker would fall to around 4.0% by the end of the year — potentially cheaper than the best current fixed deals.

n

What Most Borrowers Should Probably Do

n

For most borrowers, the psychological value of payment certainty outweighs the potential financial benefit of tracking. Fix for two years rather than five — the two-year rates are currently better and you retain the flexibility to remortgage when your fixed deal ends.

n

If your fixed rate is ending in the next six months, you can typically lock in a new deal up to six months early without switching immediately. This allows you to secure today's rates while giving yourself time to see if they improve further.

n