Could 2026 be the right time to review your mortgage plans?

Last month brought some welcome news for homeowners and buyers alike. On December 18th, the Bank of England base rate was cut to 3.75%, the lowest level in almost three years. The rate set by the Bank of England can influence the mortgage rates offered by lenders, so this could lead to lower borrowing costs.

After a prolonged period of higher borrowing costs, this shift marks an important turning point for the mortgage market – and it could create new opportunities for many households this upcoming year.

This raises an important question: could 2026 be the right time to review your mortgage plans?

The UK economy in transition: inflation, growth, and rates

Inflation has eased significantly from its peaks, falling to around 3.2%  in late 2025. The Bank of England expects inflation to fall to its 2% target, with forecasts suggesting it could reach near that level by mid-2026. With this in mind, the Monetary Policy Committee (MPC) felt confident enough to deliver a rate cut in December, bringing the interest rate down to 3.75%.

Prices are still rising, albeit more slowly, and wage growth is expected to soften further through 2026 – reducing breathing room for many households. The UK’s economy grew by more than expected in November, however, despite uncertainty around the Budget. Economists have said the data pointed to growth of 1.4% for 2025 as a whole – stronger than the previous year’s 1.1% figure.

The MPC is likely to press the pause button on the rate cuts once they reach what they consider as close to the “neutral rate”. Essentially, this is the estimated rate at which monetary policy is neither stimulating nor restricting economic growth.

Monetary policy shapes growth by changing the cost of borrowing, which influences how much households and businesses spend or invest. It also guides market expectations, affecting confidence and financial conditions.

Are interest rates expected to keep falling?

Following December’s cut, The Bank said rates were “likely to continue on a gradual downward path”, but warned judgements on further cuts next year would be more contested.

The upcoming rate review early next month is important, not because it will transform the market overnight, but because it will signal how confident the Bank of England feels about the path ahead.

Capital Economics believes interest rates could fall to as low as 3% while markets have priced in a drop to around 3.5% by the end of next year.

Could this kickstart the housing market in 2026?

Lower rates can reduce monthly mortgage payments, improve affordability, and increase choice. For some, this may mean savings on an existing mortgage. For others, it could be the nudge they’ve been waiting for to move home, remortgage, or step onto the property ladder for the first time.

If lenders continue to re‑price competitively, we could see more activity in the spring and summer, traditionally strong periods for the market.

Plus, if more lenders compete for business, the market could see a broader range of options for both buyers and those looking to remortgage.

Sometimes lenders do not lower their rates following a Bank of England rate decrease – this may be because rate reductions are already priced into lender activity, so a Bank of England rate reduction isn’t an immediate indicator that mortgage rates will drop overnight. It can take time for more confident sentiment to influence the market.

Considering your next move? Whether remortgaging, investing, or planning ahead, a quick review could highlight opportunities you might not have expected.

If you’d like tailored guidance, we’re here to help you explore what’s possible.

Buy-to-Let landlords: time to review your structure?

In recent years, changes to mortgage interest tax relief have reduced the deductions available to individual landlords, particularly those paying higher‑rate tax.

As an investor, you could take the opportunity to review if the current setup still works for you – including whether holding property personally or through a company remains the most efficient approach.

What is a Limited Company BTL structure?

• Property owned through a company rather than in your personal name, which can help you keep your personal and business portfolios separate.
• Mortgage products designed for company ownership with different criteria and pricing
• Separate tax treatment compared with personal buy‑to‑let ownership

For some landlords, holding property through a limited company can offer potential tax advantages – such as full mortgage‑interest deductibility and corporation‑tax treatment of profits. A company setup can also make it easier to retain profits for reinvestment within the business, and it may provide additional flexibility for succession planning, as company shares can be structured differently from property deeds.

However, the benefits vary widely depending on individual circumstances, therefore seeking professional tax advice is essential before making any changes.

Key considerations before making the move

Switching isn’t right for everyone, and it’s important to understand some possible implications:

• Costs of transferring property such as stamp duty, legal fees, and potential capital gains tax
• Different lending landscape with company BTL mortgages often having different fees or stress tests
• Administrative responsibilities including annual accounts and compliance
• Professional tax advice is essential, as the right structure depends on individual circumstances

How we can help

As 2026 begins to take shape, the mortgage and property landscape is shifting in ways that create both opportunities and important decisions – from easing interest rates and renewed activity in the housing market, to landlords reassessing whether their current structure still works for them.

Whatever stage you’re at, we’re here to support you. Whether you’re thinking about reviewing your mortgage or current set up, exploring protection options, or planning your next move, our Mortgage and Protection team is on hand to guide you through your choices and help you make confident, informed decisions for the year ahead.

You can:

• Call us directly on 0191 500 9164 – we’re available 7am–8pm on weekdays.
• Log in to your True Potential online account or app and contact us to book an appointment at a time that suits you.

However you choose to get in touch, you’ll be speaking with a friendly expert who’ll take the time to understand your goals and find the right solution for you.

Please remember your home or property may be repossessed if you do not keep up repayments on your mortgage.

With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors.

Tax is subject to an individual’s personal circumstances and tax rules can change at any time.

True Potential LLP is registered in England and Wales as a Limited Liability Partnership No. OC380771.

True Potential Wealth Management is authorised and regulated by the Financial Conduct Authority. FRN 529810. Registered in England and Wales as a Limited Liability Partnership No. OC356611.