6 March 2026 5 min read

Bank of England Rate Cuts in 2026: What Every Mortgage Holder Should Know

After a series of rate cuts through 2025, the Bank of England base rate has come down significantly from its peak of 5.25%. Mortgage lenders are gradually passing on the savings, and millions of homeowners are asking: should I remortgage now, or wait for rates to drop further? Here’s what you need to know.

Bank of England interest rate cuts mortgages 2026

Where rates stand now

The Bank of England began cutting the base rate in August 2024, and further reductions followed through 2025. The trajectory has been:

  • August 2024: First cut to 5.00% (from 5.25%)
  • November 2024: Cut to 4.75%
  • February 2025: Cut to 4.50%
  • 2025–2026: Further gradual cuts as inflation cooled

Markets currently expect the base rate to settle around 3.50% – 4.00% by mid-2026, though this depends heavily on inflation and economic conditions.

How much could you save?

Let's look at the impact on a typical £250,000 mortgage over 25 years at different interest rates:

Mortgage rate Monthly payment Total interest
6.00% (2023 peak) £1,611 £233,300
5.00% £1,461 £188,400
4.50% £1,390 £166,900
4.00% £1,320 £145,800
3.50% £1,253 £125,700

Moving from a 5.00% rate to 4.00% saves £141 per month — that's £1,692 per year, or £42,600 less interest over the full term.

Should you remortgage now or wait?

This is the million-pound question. Here are the key factors:

Consider remortgaging now if:

  • You're on your lender's Standard Variable Rate (SVR) — these are typically 1.5–2% above the best fixed rates
  • Your current fixed deal is ending in the next 3–6 months (most lenders let you lock in a new rate up to 6 months early)
  • You want certainty — a 2 or 5-year fix gives you predictable payments

Consider waiting if:

  • You're locked into a good fixed deal that doesn't expire soon
  • You'd face early repayment charges that outweigh the savings
  • You're comfortable with a tracker mortgage and believe rates will continue falling

Fixed vs tracker in 2026

With rates expected to continue falling (albeit slowly), tracker mortgages could save you money in the short term as they follow the base rate down. However, a 2 or 5-year fix gives you certainty — and if rates unexpectedly rise, you're protected.

The sweet spot for many homeowners right now is a 2-year fix, which locks in current rates while allowing you to reassess when rates may have fallen further.

Work out your savings: Use our Mortgage Calculator to compare repayments at different rates, or try our Overpayment Calculator to see how extra payments could cut your term even further.