A surprising new survey shows UK mortgage brokers overwhelmingly expect interest rates to rise again. The survey by Butterfield Mortgages of 300 brokers found that 69% expect the Bank of England’s base rate to exceed its current 4.5% level by the start of 2026, with over 28% predicting a rate of 5.25% by early next year.
This outlook contrasts with expectations of further rate cuts. In recent months, the Bank of England has reduced rates three times, with lenders like Santander forecasting a rate of 3.75% by year-end and analysts at Barclays and Morgan Stanley predicting rates as low as 3.5%. Goldman Sachs has even suggested a drop to 3.25% by June 2026.
Butterfield Mortgages’ CEO, Alpa Bhakta, said the survey’s findings were “surprising” given the current sentiment around rates. He said: “This underscores the need for lenders to stay ahead of the curve.”
Mr Bhakta added. “Our research points to a clear demand for expert guidance in navigating the increasingly complex regulatory and tax landscape.”
The study also revealed that 67% of brokers believe interest rates and borrowing costs will be the key factors shaping the property market in the coming year.
Additionally, brokers closely monitor Government policy changes, particularly those related to property regulations and taxes.
The upcoming changes to Stamp Duty set to take effect on April 1, were identified as a major concern.
The threshold for first-time buyers will drop from £450,000 to £300,000, and the nil rate band for other buyers will be reduced to £125,000.
These changes will result in higher tax rates for many buyers and could complicate the property investment landscape, with 64% of brokers agreeing that the adjustments will make the market “more complicated to navigate.”
Rightmove’s mortgage expert Matt Smith said: “As the stamp duty deadline edges nearer, we expect a rush to complete from those in the process of buying a home, particularly from affordability-stretched first-time buyers eager to avoid unnecessarily parting with thousands of extra pounds.”
