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Inflation down, rates headed down: impact on savers and borrowers

ended 17. December 2025

Inflation is down sharply and a rate cut tomorrow is now almost certain. What's your advice to savers and borrowers? And what could it mean for them? Will savers feel the pinch and could we get a sub 3.5% rate pre-crimbo? We are writing this story NOW so park the Shreddies and put the lead down if you're about to take out the dog.

12 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
Savers will be facing lower savings rates while borrowers will take delight as inflation falling to 3.2% makes a pre-Christmas cut highly likely. This also plays into the government's hands in its efforts to move people from cash to longer term investing, as well as allowing them to take credit for lower borrowing costs. This is the Christmas miracle the government were praying for.
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Darryl Dhoffer
Founder at The Mortgage Geezer
This government’s economic record is vandalism. Tomorrow’s rate cut is an insult, not a gift. Their "victory" over inflation is just the hollow fruit of manufactured stagnation. They have broken the economy. Savers will once again be betrayed. You save for a rainy day, only to be mugged off. As mortgage rates threaten sub-3.5% before Christmas, which will be cheered by homeowners, savers' returns will be sacrificed. For borrowers, this is light relief after years of unnecessary hikes. It isn't strategy; it’s an admission of failure. By destroying the incentive to save, they’ve made responsibility a fool's game. They have cornered us, and their only exit plan is to erode the wealth of ordinary people.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
Today's inflation data will turn heads among the UK's lenders and more rate cuts in the days and weeks ahead now look almost certain. Sub-3.5% mortgage rates should be incoming, if not before Christmas then in the New Year. It could be a busy start to 2026.
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Daniel Hobbs
CEO at New Leaf Distribution
The past week has been a huge one on the economic data front. GDP down, unemployment rising and now inflation playing ball means a rate cut tomorrow should be baked in. I'd expect a strong start to 2026 for the property market as lenders improve their pricing and transactions start moving in earnest after a quiet autumn period due to the Budget.
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Craig Fish
Director at Lodestone Mortgages
With a rate cut from the Bank of England now odds on, borrowers can expect the January mortgage sales to start with a bang, expect some lenders to break the 3.5% barrier sooner rather than later. But whilst this is good news for borrowers, savers will be penalised with lower rates too. This isn’t really a time for celebration, the government have broken the economy with their bank breaking policies and things aren’t set to get better any time soon.
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Ben Perks
Managing Director at Orchard Financial Advisers
Belting news for borrowers. I called it a few weeks ago, but sub 3.5% rates now look nailed on before the end of the year. The Monetary Policy Committee love to see a falling inflation rate too, so this bodes well for the Base Rate Decision!
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Justin Moy
Managing Director at EHF Mortgages
The most recent mortgage fixed rate pricing has clearly had this inevitable cut already factored in, so borrowers shouldn't expect to see wholesale changes to mortgage products. Only those on trackers will feel the full value of any announcement this Thursday; some lenders may be able to bring sub-3.5% cheer soon, but not immediately. The market will pay more attention to the timing of any future cuts in base rate, whether before or after Easter 2026, as that will be the real tipping point for mortgage deal pricing.
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Andrew Montlake
CEO at Coreco
Borrowers have been gifted some early Christmas cheer with inflation rising less than expected and paving the way for a December rate cut.
This will have the knock on effect that mortgage rates look certain to decrease slightly and kick off a mortgage melee in the New Year.
Savers on the other hand will be more disheartened, but that is the very point of lower rates, to encourage more spending and investment which is now crucial to address the issue of anemic growth in the UK.
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Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
Expect rates to be slashed by as much as 0.5% on Thursday following poor employment data and inflation falling off a cliff. The governor has no option apart from to stimulate the economy to save inflation from going negative. This will bode well for the chancellor who hasn’t been able to stimulate any growth herself. Borrowers should lock in now to get the best rates possible before banks follow suit and reduce what you can earn.
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Rohit Kohli
Director at The Mortgage Stop
inflation’s down more than expected but we’re not out of the woods. Even if the Bank of England cuts the base rate as is pretty much nailed on tomorrow, rising energy and business rates are still on the horizon. So if you’ve got a decent mortgage offer in front of you, it might be wise to lock it in now. It’s worth considering that the days of the fixed-rate mortgage reigning supreme might be fading - this could be a moment to give trackers a thought. Act sooner rather than later, because the landscape can shift quickly.
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Scott Gallacher
Director at Rowley Turton
Savings rates are likely to fall significantly in light of today's lower inflation. Savvy savers who can afford to tie their money up should treat themselves to an early Christmas present by taking advantage of a fixed rate savings account now, before rates fall. Whereas borrowers might want to wait until rates fall before remortgaging or taking on extra debt.
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Patricia McGirr
Founder at Repossession Rescue Network
Inflation falling sharply changes the mood overnight, but the impact will not be shared evenly. A rate cut now looks almost certain and lenders have already moved, so a sub 3.5 percent headline rate before Christmas is possible for the lowest risk borrowers. That is genuine relief for some households coming off expensive deals.

Savers, however, will feel this fast. Easy access and short term savings rates are likely to be cut quicker and deeper than mortgage rates fall, as banks protect margins. Once again, savers become the shock absorber.

The Chancellor will call this a policy win, but that flatters the data. Confidence remains low, access to credit is still selective, and cheaper money only helps if people feel secure enough to use it. Borrowers should look beyond the headline and lock in certainty. Savers need to act now, because the window is already closing.