Advisers split on rate outlook but agree borrowers should secure offers before lenders reprice
Mortgage brokers are urging clients to act early and consider flexible products ahead of the Bank of England's Monetary Policy Committee meeting tomorrow, as geopolitical pressures and volatile swap rates continue to unsettle the market.
The consensus among advisers is that Bank Rate will hold at 3.75% — a view supported by median forecasts from 65 economists surveyed by Reuters between 5 and 12 June, all of whom predicted no movement at this meeting. Yet the same poll found that nearly 40% of respondents expected at least one hike before the year-end, reflecting the uncertainty now shadowing the market.
Gareth Lowman (pictured top, far left), director at SPF Private Clients, said the prospect of a rate rise had not been ruled out entirely. "While a base rate increase is possible at the next meeting, it is not looking likely," he said.
"The MPC will want to see more evidence of secondary effects caused by the Middle East conflict, while there are also concerns for the wider economy and the labour market, which have greater weight among the hawks on the Committee."
Craig Head (pictured top, second from left), director at Mortgage Required, said lender behaviour pointed strongly towards a hold. "The current trend of rates with all major lenders has been downwards, with most major lenders trimming their rates in the last week," he said — typically a signal that those who closely monitor monetary policy expect Bank Rate to stay put.
Gerard Boon (pictured top, far right), managing director at Boon Brokers, pointed to UK GDP data as the key constraint on MPC action. "Given the latest news regarding the UK's GDP contraction last month, inflation is expected to fall if these contractions continue," he said.
"If they were to increase their Base Rate, as some economists anticipate, it could create a deflationary environment in the UK, which may result in an even quicker contraction to the economy as buyers hold back from spending."
Neil Mulhearn (pictured top, second from right), head of sales at Echo Finance, offered a more cautious view, saying a hike this month was possible. "The European Central Bank have just increased their rates, and the Bank of England may be forced to follow suit," he said.
He highlighted the potential for inflationary pressure from rising domestic fuel bills and continuing conflict in the Middle East as factors that could prompt earlier action from the MPC.
Tracker products gain ground
The most consistent theme across broker responses was a shift in client appetite towards tracker mortgages, driven by the pricing gap between trackers and fixed-rate products that emerged following lender repricing in early 2026.
Lowman noted that some clients were leaning towards tracker products given where fixed-rate pricing currently stood. "Fixed rates saw significant increases across the board so it would require several base rate rises to make them more cost-effective than trackers," he said. "What's more, most trackers have no early repayment charges so the borrower can switch to a fix whenever they choose, and not pay a penalty to do so."
He also noted a broader shift in borrower behaviour. "There has also been a shift from longer-term to shorter-term fixes, with borrowers thinking that the increases in the cost of fixed rates are likely to be temporary so it is unwise to fix at current highs."
Boon said the appeal of trackers was partly tied to expectations around how geopolitical developments might resolve. "Clients understand that if the war in Iran ends, the Bank of England may reduce their Base Rate in the medium term as oil prices return to normal levels," he said. "Therefore, those on tracker mortgages (assuming no/minimal early repayment charges) could benefit after capitalising from well-timed refinancing."
Head and Mulhearn both emphasised the importance of clients securing a rate at the earliest opportunity, given the pace at which lender pricing can shift. Head noted that any initial offer could be reviewed regularly and improved if conditions changed — but that being without a secured rate when the market moved upward left borrowers exposed.
Lowman said that six-month mortgage offer validity periods provided additional protection. "Should they commit now and rates fall, they may be able to switch to a lower rate before they complete," he said. "However, should rates rise again, they know they have a safety net in place."
Outlook: one or two rises before settling
Looking further ahead, Mulhearn said he expected one or possibly two rate rises before the end of 2026, followed by a stabilisation into 2027 and a potential return towards current levels. He also flagged the political environment as a variable.
"The other big unknown factor is who the Prime Minister will be going into 2027 — any sharp shift to the left, especially funded by higher borrowing and/or taxes, could well unsettle the markets," he said.
Boon's longer-term outlook was contingent on the outcome of the conflict in Iran and its effect on oil supply. "If the war in Iran ends over the next six to 12 months, which is expected, I believe interest rates will return to their level in Q1 of 2026," he said. "If the war does not end, causing sustained spikes in inflation, the Bank of England may be forced to increase their Base Rate."
Lowman said base rate was unlikely to move this year, adding that the conditions driving recent hike cycles had not returned. With swap rate volatility remaining a persistent feature of the market, he concluded that "independent advice will be more valuable than ever."
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