The Bank of England has reduced the base rate to 3.75%, and while that may not grab headlines on its own, it does change the backdrop for the UK property market. After a long stretch of rising borrowing costs, this move suggests we may be moving into a more stable phase.
For anyone thinking about buying, selling or letting property, the key point is not instant change, but what this could mean over the next year. As we look ahead to 2026, the focus shifts from reacting to higher rates to planning around more manageable borrowing conditions.
Related: The 2025 Budget and what it means for homeowners and landlords
Why the base rate matters to homeowners and buyers
The base rate is the interest rate set by the Bank of England. It affects how much it costs banks to borrow money, which then influences:
- Mortgage interest rates
- Monthly mortgage repayments
- How much buyers can afford to borrow
- General activity across the property market
When the base rate comes down, lenders don’t change everything overnight, but mortgage products tend to improve gradually. Over time, this can make borrowing more affordable and bring more people back into the market.
This latest cut is widely seen as a sign that inflation is easing and that the period of sharp rate rises may be behind us.
What mortgage holders should think about now?
If you already have a mortgage, how you’re affected depends on the type of deal you’re on.
Tracker and variable-rate mortgages
If your mortgage tracks the base rate or is variable, you may see a small reduction in your monthly payments. While the savings may not be huge, they can still make a difference to household budgets.
Fixed-rate mortgages
If you’re on a fixed-rate deal, nothing changes straight away. However, as the base rate eases, lenders may begin offering more competitive fixed-rate deals.
If your fixed term ends in the next six to 12 months, it’s worth reviewing your options early rather than waiting until the last minute.
What buyers may need to consider
Lower borrowing costs can help improve affordability, particularly for buyers relying on a mortgage. Monthly repayments may become easier to manage, and lenders may be more competitive.
Rather than a rush, this is more likely to lead to a steadier market in 2026, with buyers taking time to make decisions rather than feeling pressured to act quickly.
If you’re planning to buy, preparation is key. Having your finances organised, including your deposit, mortgage advice and realistic budget, puts you in a stronger position when the right property comes along.
What this means for sellers
As borrowing becomes more affordable, buyer interest often becomes more consistent. This doesn’t automatically mean higher prices, but it can help support demand and improve the chances of a sale.
Looking ahead to 2026, sellers may find the market feels more balanced. Buyers remain price-conscious, so realistic pricing and good presentation are still essential.
If selling is on your plans for next year, getting an early valuation and understanding local demand can help you decide the right timing and strategy.
What landlords and investors should be aware of
Landlords have faced higher mortgage costs alongside wider changes in the rental sector, so any easing in borrowing costs is likely to be welcome.
Those on tracker mortgages or approaching a remortgage may benefit first. If rates continue to ease into 2026, this could support cash flow and make longer-term planning easier.
Rental demand remains strong in many areas, with supply still limited. This continues to underpin the rental market, even as conditions in the sales market shift.
Related: Why Getting Your Rental Price Right Matters More Than Ever in 2026
What the property market could look like in 2026
Further base rate cuts are possible, although this will depend on inflation and wider economic conditions. If borrowing costs continue to ease gradually, the market is likely to see steady activity rather than dramatic change.
For buyers, sellers and landlords, this points towards a more predictable environment, where decisions can be made with greater clarity and less urgency.
Key point: If you’re planning a move, a sale, a remortgage or a review of your buy-to-let plans in the next year, starting early gives you more options and more control.
Related: A major change for self-managing landlords: New Renters’ Rights Act powers start on 27 December 2025
Why this base rate cut matters
This base rate cut is important because it signals a shift in direction. It doesn’t change everything overnight, but it does allow people to stop reacting and start planning.
Property decisions are always local, and timing matters. Your local Hunters team can help you understand what’s happening in your area, whether you’re buying, selling or letting, and help you plan your next step with clear, practical advice.
Thinking ahead to 2026? Book a free property valuation with Hunters to see where you stand and what options are available.
