December 2025 Mortgage Market Outlook: A New Chapter Begins, Marking Time to Prepare for 2026
What the Latest Base Rate Cut Means for You
The Bank of England has reduced the base rate to 3.75%, its fourth cut this year. As we move towards 2026, this marks an important shift in the mortgage market and creates a more constructive backdrop for homeowners, buyers, and property investors.
This change is not simply about cheaper borrowing in the short term. It reflects a broader improvement in economic conditions, with inflation easing, markets stabilising, and lenders becoming more open to new lending. For many clients, this is a sensible time to review their position and plan ahead, rather than waiting until deadlines force decisions.
A Market That Is Improving, But Still Selective
Mortgage rates have begun to soften and lender confidence is gradually returning. However, outcomes still depend heavily on how and when applications are made. Lenders remain cautious, particularly where income is complex or circumstances fall outside standard criteria.
Put simply, preparation matters. Those who plan early tend to have more choice, greater flexibility, and better outcomes.
Why It Makes Sense to Review Your Mortgage Now
Some borrowers may be considering whether to wait in the hope that rates fall further. While that may happen, experience shows that the strongest opportunities are often available before markets become busy again.
There are three practical reasons to consider reviewing your position now.
1. Lenders Are Becoming More Competitive
Banks and building societies are once again competing for business. This includes improved affordability assessments and, in some cases, more tailored lending for clients with complex income or asset-backed wealth.
These conditions may not last indefinitely, particularly if demand rises sharply in 2026.
2. You Can Secure Rates Well in Advance
If your current fixed rate ends within the next 6 to 12 months, it may be possible to secure a new rate now, often up to six months before your existing deal expires. Many lenders also allow you to switch to a better rate if pricing improves before completion.
This approach provides reassurance without locking you into a decision too early.
3. Greater Flexibility for Non-Standard Situations
Lenders are showing renewed flexibility for clients, such as:
- Business owners and self-employed individuals
- Those with bonus, commission, or deferred income
- Clients with overseas income or international assets
- Older borrowers who are still earning or asset-rich
- Property investors restructuring portfolios
When these cases are prepared properly and early, outcomes tend to improve significantly.
Who Should Consider a Mortgage Review?
Homeowners with Fixed Rates Ending Soon
If your mortgage deal expires within the next year, an early review can help you avoid time pressure and give you more options.
Clients Looking to Restructure or Release Capital
Lower rates are reopening opportunities to refinance, consolidate borrowing, or release funds for school fees, home improvements, or longer-term planning.
Property Investors and Landlords
The buy-to-let market is becoming more active again. Many landlords are reviewing portfolios, refinancing existing properties, or considering limited company and mixed-use structures.
Later-Life Borrowers
Age alone is no longer a barrier to borrowing. Many lenders will consider applicants well into their seventies or eighties, particularly where income continues or assets provide strong support.
Looking Ahead to 2026
The coming year is likely to be more stable than the last two, but lenders will remain selective. Those who take time now to review and plan are likely to be better positioned than those who wait until their mortgage becomes urgent.
How Henry Dannell Can Help
At Henry Dannell, we take a considered, structured approach to mortgage advice. We work closely with our clients to understand their wider financial position, identify the most appropriate lenders, and manage the process from start to finish.
Our focus is not simply on securing the lowest headline rate, but on delivering the right solution for your circumstances, clearly, discreetly, and efficiently.
If you would like to review your mortgage or discuss how the recent base rate cut may affect you, we would be pleased to help.
Please note: This article is intended for informational purposes only and does not constitute financial advice. The information contained herein is based on market conditions and opinions at the time of publication and is subject to change without notice. This article may contain references to or summaries of market research reports or analyses prepared by external providers. Henry Dannell does not endorse or adopt the views expressed in any such third-party reports. We recommend that you review the original research reports before making any decisions based on their content. Please also note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.