What the base interest rate cut to 3.75% means for homebuyers
Following the Bank of England’s latest announcement confirming a cut to the base rate from 4.00% to 3.75%, many homebuyers will be reassessing their plans for the year ahead. The decision marks a positive shift in market conditions and reflects growing confidence in the direction of the UK economy as we move into 2026.
In the lead-up to the announcement, lenders had already begun responding to expectations of a rate cut. Several major banks reduced their fixed mortgage rates in recent weeks, and today’s decision is expected to reinforce that trend.
For buyers considering a move in 2026, this change could create a valuable opportunity.
Why mortgage rates are already falling
Mortgage lenders tend to price their products based on where they expect interest rates to head, rather than waiting for official announcements. As a result, fixed mortgage rates had already been edging down ahead of the base rate decision, with some deals now available in the mid three per cent range.
With the base rate now sitting at 3.75%, this outlook has been strengthened. More competitive mortgage products can improve affordability, reduce monthly repayments and give buyers greater confidence when planning their next move, particularly those looking to secure a longer-term deal.
Is now a good time to buy?
While some buyers may still wonder whether it is better to wait, market forecasts suggest that delaying a move can come with its own risks.
According to Savills’ regional house price forecasts, property values are expected to continue rising over the next five years*. For buyers planning to move anyway, securing a home now could mean benefitting from future price growth, rather than facing higher price purchases later.
At the same time, improved mortgage rates are giving buyers more choice, allowing them to lock in a deal that suits their budget and long-term plans.
Support available for buyers
Understanding affordability is one of the most important steps when buying a home. That’s why we work closely with trusted, independent financial advisors, including Evolve Financial Solutions, who can help buyers explore their options and understand what they could comfortably borrow.
Jason Blunden, Managing Director at Evolve Financial Solutions, said: “This is a great end to 2025 and hopefully just the start of further base rate cuts next year. Fixed rates have been dropping each week, with lenders such as Halifax now offering rates as low as 3.57% for a 60% mortgage and 4.14% for a 90% both fixed for two years. Specialist lenders continue to also reduce their fixed rates with Aldermore reducing theirs by up to 0.86%.
“What a great way to start 2026 with lower fixed interest rates and increased lending caps allowing borrowers to borrow up to seven times their income. Lots of way to help people buy new build in the new year.”
With expert guidance, buyers can feel more confident navigating mortgage products and making informed decisions that work for their circumstances.
How Allison Homes can help
At Allison Homes, we support buyers at every stage of their journey, offering a range of schemes designed to make moving easier and more affordable. These include Part Exchange, Deposit Match, Key Worker discount and other tailored incentives, depending on development and eligibility.
With many homes available now and borrowing conditions improving, buyers have the opportunity to secure a new home and plan ahead for 2026 with greater certainty.
If you’re thinking about your next move, our friendly sales team are on hand to help you understand your options and take advantage of current market conditions. Find out more about our available homes.
For free mortgage advice, call Evolve on 01473 603 211.
*Savills’ regional house price forecasts
Allison Homes Web Article: 18th December 2025
