Mortgage Rates Are Falling. What That Really Means for the 2026 Property Market
The Bank of England has just confirmed a cut in the Bank Rate to 3.75%.
With interest rates now around 1% lower than earlier this year, many local homeowners buying at the average house price of £250,000 could see mortgage costs fall by roughly £125 a month.
That is a meaningful saving, but it is only part of the picture when it comes to moving in 2026.
Here is what is really going on.
Why the Bank of England Cut Rates
Predicting interest rates over the last year has not been easy.
Probably the most confusing stretch since former Bank of England Governor and now Canadian Prime Minister Mark “Carnage” Carney spent years hinting at rate rises that rarely appeared.
This time, though, a cut felt inevitable.
The UK economy needs support. Growth dipped again in October and expectations for a strong rebound remain modest.
Unemployment has climbed to 5.1%, the highest level in four years.
Inflation has eased slightly to 3.2%, helped in part by falling food prices, but it remains above the Bank of England’s 2% target.
Put together, the pressure on the economy outweighed inflation concerns and the Bank acted.
What This Means Looking Ahead to 2026
Most economists are now forecasting further gradual reductions through 2026.
That points towards improving mortgage affordability for buyers and better remortgaging options for homeowners across Hull, East Yorkshire and North Lincolnshire.
But interest rates alone do not drive the property market.
Interest Rates Matter, But They Are Not Everything
Every week we speak to buyers and sellers locally.
Interest rates matter, but they are only one part of the decision.
Confidence, job security, lifestyle changes, schools, family needs and the wider cost of living all influence when people move. When confidence dips, people pause. When confidence improves, activity returns.
The encouraging news is that most respected forecasters expect a steady and stable housing market in 2026.
The Office for Budget Responsibility is forecasting average UK house price growth of around 2.5% next year. Capital Economics broadly agree, with forecasts between 2.5% and 3%.
That combination of modest price growth and easing mortgage costs is not bad news. It is what a healthy market looks like.
What the Interest Rate Drop Means in Real Terms
To put this into practical perspective, let us use a typical local example.
With the average house price around £250,000, many buyers might be borrowing roughly £225,000 on a 25 year repayment mortgage.
Earlier this year, mortgage rates were commonly around 4.5%. Today, many new deals are closer to 3.5%, reflecting the roughly 1% drop in the base rate over the year.
At 4.5%, monthly repayments on a £225,000 mortgage would be approximately £1,250 per month.
At 3.5%, that figure falls to around £1,125 per month.
That is a saving of roughly £125 a month, or £1,500 a year.
Actual figures will vary depending on lender, product and term, but this illustrates why rate changes matter while also showing their limits.
So What Does This Mean If You Own a Home or Are Thinking of Moving in 2026?
This is the bit that really matters.
If you already own a home, easing mortgage costs can improve affordability and confidence. That often encourages more buyers into the market.
More buyers means more competition. More competition supports prices.
If you are thinking about selling in 2026, that is important. A market with confidence is a market that moves.
If you are thinking about buying, lower interest rates help monthly affordability, but they also tend to increase demand. That is why waiting for rates to fall is not always the win people expect.
A great market to sell in is usually a hard market to buy in.
A hard market to sell in is often a great market to buy in.
You rarely get both at the same time.
Our Advice Going Into 2026
If you are thinking about moving in 2026, preparation matters more than prediction.
My advice is simple. Get ready before Easter.
Yes, seasonal shifts still exist, but they are far less pronounced than they used to be. Technology has changed how people search and act.
In fact, some of the busiest days we see are when the weather is awful. People are not out and about. They are on their phones, scrolling property portals and booking viewings across Hull, East Yorkshire and North Lincolnshire.
Those who are prepared early tend to move first. And in property, moving first often gives you the advantage.
Here to Help
If you own a home and are considering selling, or if you are thinking about moving in 2026, now is the right time to get clear advice.
If you are struggling to make progress with your current agent, that is also a conversation worth having.
If you would like a clear, honest discussion about your options, I or one of my team would be happy to come and see you and offer straightforward advice.
-By Steve Beercock, Executive Director
