A new year, a fresh new look and we are very much hoping we can reconnect to continue to help you on your mortgage journey.
A logical place to start on this update is a look back at 2025 and what we can expect in the year ahead. Plus our plans for 2026 which will be building in even more much needed areas of advice. So for all that and more, hope you enjoy the update:
Interest Rates
The logical place for a mortgage adviser to start is to look at interest rates and 2025 was certainly a positive year in that regard. We started the year at 4.75% on the UK Base Rate and ended at 3.75%. While these cuts were widely predicted, it was good to get through a year without a fly in this ointment.
That leaves the big question of what may be in store for 2026. If you look at Money Markets (see below) and general consensus in the mortgage world, it should be much of the same – steady rate reductions – nothing exciting. The most common view, and the one I agree with, is that we are likely to end the year at about 3%, so a further 3 cuts from where we are today. The biggest clue we get about this is from the Bank of England directly, as if you look at the voting patterns and minutes from their last meeting, you can learn a lot.
In December, the Bank of England’s MPC Committee (the team that sets the benchmark UK Interest rate) voted 5 to 4 to cut rates, with the other 4 members voting to hold. So that in itself doesn’t give you huge confidence more cuts are on the way, but the comments they made around inflation were very telling. They expect inflation to fall faster than forecast earlier in the year to get back to the 2% target level by as early as April. In their last meeting 6 weeks prior they thought that may not happen until 2027, which was hampering their ability to cut rates faster in 2025 (as economics 101 is to not cut interest rates when inflation is above the target level or rising), so without that being a barrier, we could well see more cuts in 2026. Money Markets have certainly bet on that, as have mortgage lenders as headline mortgage rates are continuing to creep down.
House Prices
A bit of an odd year on house prices. With the Budget spooking everyone with talk of localised house price taxes, council tax re-bandings and mansion taxes. Ultimately it manifested that the Government in their wisdom have launched a ‘Mansion Tax’ which kicks in from properties valued over £2m with very unclear guidance on what metrics will be used and how it will be collected.
Whatever the holes in the policy are, it certainly took the wind out of the sails of the central London market and high valued properties across the country. So, while the national picture of house prices (see below) tells one story, localised and price specific bands tell a very different story. With the Treasury and Office for Budget Responsibility’s own estimates, saying they believe it could take up to 2.5% off the valued of property in the £2m+ bracket.
I can hear everyone playing the world’s smallest violin for people affected by this, hence why Labour chose to pick that fight, however I believe the policy to be short sighted. Not just that it affects a disproportionate amount of our clients, but these things always have knock on impacts. The most likely is that sales of large properties will be depressed until at least the end of this parliament which affects the whole property market. Also, with less people moving comes less revenue on Stamp Duty and all the positive economic knock-on impacts of moving which are well known. I fear this change could get even less revenue into the Government coffers than previously was the case. Admittedly not huge numbers in the scheme of the national finances but an unhelpful policy in my view.
In fact I would go further. I very much agree with the Institute for Fiscal Studies in their report labelled ‘How to Fix Property Taxes’ released in October 2025 which calls for a complete abolition of Stamp Duty. As what had once started as a tax on the rich, became a prohibitive tax for all. Sound familiar? Well worth a read or listen of that if you have the time.
The big question will be – will house prices rise in 2026? Every major index and commentator believes so, with the range of around 2-4% growth depending on who’s tea leaves you are reading. That does seem about right to me but as mentioned above, you could well see large regional and price bracket differentials with London and the South East coming off worse yet again!
New for 2026
I am very excited to announce a new partnership for 2026. We have chosen to work with the network New Leaf Distribution who will underpin the advice we give. That means all avenues of advice are now open to us, so we will still be offering all the services we did previously – First Time Buyers, Home Movers, Remortgages, Buy To Let, Short Term Lending & all forms of Mortgage Protection – we can now add in areas such as – Second Charge Loans, Home Insurance and crucially, Investment permissions
I am personally working through the relevant Qualifications and FCA permissions to offer Investment advice to our clients, which I hope to launch in mid-2026. This is a very exciting evolution for me and the business. I have lost count of the times I have been asked if we provide this level of advice but have been unable to until now. With this new partnership, it opens the door to a meaningful, lifelong relationship with you and your family which I can’t wait to get started on. You’ll be talked through this and how it could benefit you as part of our usual process, but if you have any burning questions, please feel free to ask. This is a very long-term project for me which I am and very excited to bring it to life as there should no longer be an area of financial advice we can not assist with directly.
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