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Mortgage rate war

ended 31. December 2025

Are you expecting lenders to cut aggressively in the first working days of 2026? If not Friday 2nd then Monday 5th? Are you expecting a sub-3.5% rate at lower LTVs? And which lenders might move first? Any thoughts, send them across, as we're writing this story now.

9 responses from the Newspage community

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Darryl Dhoffer
Founder at The Mortgage Geezer
As Fabrizio Romano would say: Here we go.
I am expecting all main High Street lenders to shave interest rates within the first two weeks of 2026.
The reasoning is simple commercial reality. After a sluggish final two months of 2025, banks are entering the new year with aggressive targets and empty loan books to fill. They cannot afford a slow start. They need volume immediately to make up for the Q4 dip.
Margins are there to be squeezed, and lenders will want to start 2026 with a bang. Expect a "New Year Sale" mentality as the big banks fight to capture market share. The quiet period is over; the rate war is about to restart.
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Justin Moy
Managing Director at EHF Mortgages
I don't see a lot of change at the start of 2026; lenders can only 'slash' rates if the Swap markets allow cheaper funding, and there is little need for lenders to give money away frivolously. There will be improvements over time, but this year will likely see more deals in the 3% range at all LTVs, with the specialist markets about 1% higher, on average. Cuts? - Yes, aggressive? - i don't think so.
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Harry Goodliffe
Director at HTG Mortgages
January could kick off with lenders firing the starting gun. I don’t expect a full blown rate war on day one, but the pressure to move early will be huge. If swap rates behave, sub-3.5% deals at lower LTVs are well within reach in the first week of 2026. The early cuts will come from building societies chasing market share, and once one blinks, the rest won’t be far behind.
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David Stirling
Independent Financial Adviser at Mint Wealth
It will hopefully take one major hitter to take the icy plunge next week to set off a rate war, most likely a Halifax or Nationwide. Lenders will be keen to take advantage of borrowers' sentiments after the rate cut in December and will be vying to start the year strongly. With sub-4% rates readily available to borrowers with the right profile, we could potentially see rates sub-3.5% emerge by the end of January.
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
If one big lender make some aggressive cuts, we could see a domino effect that will clearly delight borrowers. A huge number of people are set to remortgage this year and mortgage rates edging down will help to reduce the pressure many households are under.
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Craig Fish
Director at Lodestone Mortgages
I’m not expecting aggressive cuts in the first working days of 2026. We may see a few tactical moves as lenders compete for early visibility at the top of the best-buy tables, but these are likely to be modest rather than market-shifting. Sub-3.5% rates at lower LTVs are possible, but they’ll be selective and tightly controlled, aimed at borrowers with strong equity or large deposits rather than the wider market. Looking across 2026, margins should continue to edge down, but this will be slow and disciplined, not a race to the bottom. Lenders remain focused on protecting profitability. One area to watch is product transfers. Lenders may price more aggressively to retain existing customers, and that could start to create friction between broker-sourced and direct-to-lender pricing.
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Elliott Culley
Director at Switch Mortgage Finance
The reduction in the base rate in December has resulted in high level anticipation of lenders cutting their mortgage rates in January. Mortgage lenders will have new targets and it's expected that some will want to start 2026 with a bang by reducing their products. However I don't expect it to be the fire sale some have predicted and I would only expect to see reductions in the 2 year fixed rate market rather than longer fixed rate propositions such as 5 year fixed. As 2026 progresses it's expected rates will reduce further, but mortgage borrowers may need to be patient and wait for mortgage lenders to make their move and markets to settle.
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Patricia McGirr
Founder at Repossession Rescue Network
January rate-cut hype is louder than the reality lenders are prepared to deliver. Most will sit on their hands in the first working days of 2026, waiting for markets to settle before showing intent. Any moves on Friday 2nd or Monday 5th are likely to be careful trimming, not a price war. Sub-3.5% rates at lower LTVs are achievable this quarter, but only for the cleanest borrowers. These will be shop window deals to win volume, not a market-wide reset. The first movers will be lenders with balance sheet headroom and confidence. Expect big high street names and well-funded building societies to probe first, with others following once the tone is set. Stock is already building. Sellers are lining up for a new year push. One decisive lender move would change sentiment overnight.
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Omer Mehmet
Managing Director at Trinity Finance
Following last month's base rate cut and inflation once again edging down, the first quarter could see lenders continue to shave their rates. In November and December we saw mortgage rate skirmishes but one big move from a major high street lender in early January could trigger a full-blown rate war. A lot of brokers are anticipating a busy first three months of the year. There is a lot of pent-up demand from transactions that were put on ice ahead of the late November Budget as people wanted to know what they were dealing with before buying or moving home.