Interest Rates Are Falling | What It Means for your Mortgage, Savings and Next Move in 2026

After a long period of rising borrowing costs, the UK is finally seeing interest rates ease. The Bank of England has begun cutting the base rate, and while headlines suggest this is “good news”, the reality for households is more nuanced. 

So, what does the changing rate environment actually mean for your money in 2026? 

Mortgage rates: relief, but not a return to the past 

Mortgage rates have already started to fall from their recent peaks, with many lenders reintroducing sub-5% fixed deals. However, rates remain significantly higher than the ultra-low levels seen just a few years ago. 

What this means in practice: 

• Homeowners coming off fixed deals may still face higher repayments than before 

• Buyers may find affordability improving slightly, but not dramatically 

• Timing and product choice matter more than ever 

Even a difference of 0.25% on a mortgage can amount to thousands of pounds over a fixed term, which is why reviewing options early is key. 

Source: Bank of England

Savings: good news if you act 

Higher interest rates have been good for savers, but only those who’ve moved their money. Despite competitive rates being widely available, billions of pounds remain in low interest rate accounts earning well below the market average. 

With rates expected to slowly trend down: 

• Savers should consider locking in competitive interest rates where appropriate 

• Cash sitting in old accounts could lose value in real terms 

• A clear savings strategy matters more as inflation eases 

If it frustrates you that the bank makes more profit from your savings than you do then think about whether all or some of them should be invested.  Have a no-obligation and free of charge chat with a KGJ adviser to review your situation and talk through your options. 

What about those waiting to buy or remortgage? 

Many people delayed decisions during rate uncertainty. As the market stabilises, January is seeing renewed interest from: 

• First-time buyers reassessing affordability 

• Homeowners reviewing early remortgage options 

• Investors recalculating returns 

The key question isn’t “Will rates fall further?”, it’s “What’s the right move based on my situation?” 

Why advice matters more in a shifting market 

When interest rates were near zero, decisions felt simple. In today’s market, the difference between the right and wrong choice can have a long-term impact on monthly costs and financial security. 

Unsure how the changing interest rates affects you?

Complete this form and one of our experienced mortgage advisers will give you a call. We’ll take the time to understand your current situation and talk through which interest rate options may be most suitable for you, with no obligation, and free of charge. If you’d prefer to get in touch, you can call us on 01384 390909 or email office@kgjinsurance.com