2026 started frantically, with some lenders cutting their fixed rate deals so low that they were essentially selling mortgages at cost.
Such aggressive pricing, in which lenders offer loans at or near swap rates, is typically a short-term measure designed to grab headlines and market share.
Itโs fairly common in January, but by February it often ends up like most peopleโs New Yearโs Resolutions – hard to stick to. Rates have started to creep back up over the last couple of weeks.
However, the surprise voting pattern behind todayโs Bank of England decision could give lower rates a new lease of life. The fact that nearly half of the Monetary Policy Committee voted for an immediate rate cut implies thereโs a distinct possibility that a cut could come the next time they meet in March.
This means that a fall in swap rates, which lenders use to determine the fixed rates they offer to customers, could come in the coming days. Competition is still intense amongst lenders, and this combined with falling funding costs could be great news for borrowers in the days ahead.
Whether we get a bank base rate cut in March, and the extent to which swap rates fall, now largely depends on how inflation behaves. In December, CPI jumped back up to 3.4% and the markets will be watching the January data, which comes out later this month, intently.
The Bank is expecting inflation to start easing rapidly, but there are no guarantees as to extent and timing. If CPI refuses to play ball, the next base rate cut could be delayed – but for now anyone looking to buy their first home or remortgage can celebrate as lenders fight hard for their business.
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