Base rate cut to 3.75%: what it means for mortgages and the housing market in 2026
The Bank of England has cut the base rate from 4% to 3.75%. Here’s who benefits, what it could do to buyer confidence going into the New Year, and what the big forecasts are saying about 2026.
The Bank of England has cut the base rate to 3.75%, down from 4%.
That is not a magic wand, but it is a very clear signal: the era of “rates only go up” is fading, and the housing market usually responds to that shift in mood faster than it responds to the actual maths.
Here’s what it means in plain English.
1) Who actually benefits (and how quickly)
Buyers with trackers and some variable deals:
If you’re on a tracker (or a variable rate that moves with the base rate), you’re the person who actually feels this first. Your lender may pass the cut on relatively quickly, though “quickly” in banking can still mean “whenever they stop having a meeting about it.”
Buyers taking a new fixed rate mortgage
Fixed rates are priced off what lenders think happens next, not only today’s decision. So some of the improvement may already be baked in, but a cut like this can still help keep downward pressure on mortgage pricing and confidence.
Sellers (indirectly)
Sellers benefit when:
- Affordability improves a little
- Buyers feel less nervous
- More people decide to stop waiting and start viewing
A rate cut tends to do all three.
2) What this could do to the market going into the New Year
January is always a “fresh start” market, but it’s especially true when headlines turn from rate rises to rate cuts. This shift can:
- Increase viewing levels because buyers feel it’s safer to commit
- Reduce hesitation (less “we’ll wait and see” behaviour)
- Strengthen proceedable buyers as mortgage offers look less punishing
The Bank itself has also said it expects rates may fall gradually further, but future moves depend on things like pay growth and services inflation continuing to ease.
3) 2026 house price predictions (what the grown-ups are saying)
Nobody with a straight face is calling for a boom. The theme is modest growth and a market that functions a bit more normally again.
Here are three credible forecasts for 2026:
- Rightmove: asking prices predicted to rise around 2% by the end of 2026.
- Nationwide: expects house price growth in the 2% to 4% range in 2026, helped by easing affordability pressures.
- Halifax: forecasts 1% to 3% growth in 2026, with affordability improving but uncertainty still in the mix.
So, not fireworks. More like: steady improvement, more movers getting on with life.
4) How the rate cut might change buying decisions
This is the practical bit that affects real chains and real offers:
More buyers stop waiting for “the perfect rate”:
A single cut won’t transform affordability overnight, but it can be enough to tip people from “maybe” to “let’s book viewings”.
Remortgagers re-enter the market
Some homeowners who were holding back because of the cost of borrowing may feel more comfortable upsizing or relocating if the mortgage jump looks less brutal.
Buyers move faster when they see a good deal
In improving conditions, the best homes (well-presented, correctly priced, good layout, good location) often sell first because buyers fear missing out more than they fear the market.
5) What sellers should do now (so they win in early 2026)
A base rate cut helps, but it doesn’t replace the basics. The homes that do best in a “modestly improving” market tend to be:
- Priced correctly from day one (buyers are still value-sensitive)
- Marketed properly (great photos, professional video, strong description, clear positioning aimed at your perfect buyer)
- Easy to view (availability converts interest into offers)
If you want January momentum, the goal is simple: hit the market looking like the best option, not merely an option.
If you’re thinking of moving in early 2026, the smartest next step is a clear plan: what your home could sell for in today’s market, what your likely buyer looks like, and how to position your property to get serious offers.
Book a valuation with us and we’ll give you an honest price guide and a simple, no-fluff strategy to get you sold.
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