UK mortgage brokers expect the Bank of England base rate to rise again by January 2026, despite the recent fall in inflation and the central bank’s indication that further rate cuts could follow.
A new survey of 300 brokers, commissioned by Butterfield Mortgages in the UK, found that 69% believe the base rate will be higher than its current level of 4.50% at the start of 2026, with 28% predicting a rise to 5.25%.
Interest rates and borrowing costs are expected to be the most critical factor influencing the property market in 2025, according to 67% of respondents. Brokers also highlighted the impact of recent regulatory and tax changes, with 64% stating that adjustments such as the increase in Stamp Duty, set to take effect in April, have made property investment more complex.
Alpa Bhakta, CEO of Butterfield Mortgages in the UK, said: “It’s no surprise that most UK brokers remain focused on the Bank of England’s interest rate decisions—these have long been, and will continue to be, the key driver of market activity. However, it is surprising that 69% of brokers expect the base rate to be higher at the start of 2026, especially given January’s decline in inflation and the Bank of England’s indication that further rate cuts could follow.
“This underscores the need for lenders to stay ahead of the curve—our research points to a clear demand for expert guidance in navigating the increasingly complex regulatory and tax landscape. Specialist lenders must utilise their network of regulatory and tax experts to help brokers support property investors to make confident decisions about their portfolios in the coming months.
“While market conditions have shown some signs of improvement, it’s clear that brokers and lenders must collaborate closely. Together, we can address the challenges ahead and ensure the property market remains resilient in 2025 and beyond.”
