UK Mortgage Brokers Brace for Interest Rate Hikes by 2026 Despite Analyst Optimism
Mortgage Brokers and Analysts Are Worlds Apart on UK Interest Rate Outlook
You’d think that people working in the same sector would have a similar sense of what the future holds. But right now, mortgage brokers and big-name analysts couldn't be seeing things more differently. According to a fresh Butterfield Mortgages survey, a whopping 69% of UK mortgage brokers expect the Bank of England to push its base rate past the current 4.5% mark by early 2026.
Drilling down, almost 3 in 10 brokers in that group aren’t ruling out even heftier hikes: they see the base rate reaching as high as 5.25% within the next 18 months. For anyone with a mortgage coming up for renewal, that’s a pretty uncomfortable prediction. It's not just a guess, either; brokers say they're reacting to persistent inflation that keeps outweighing optimistic economic signals. They see inflation as the main obstacle preventing any significant rate reduction, believing price pressures will stick around longer than many anticipate.
Why Brokers See Rate Hikes, While Analysts Bet on Cuts
On the other side, some of the world’s biggest banks are singing a different tune. Goldman Sachs expects rates to actually drop to 3.25% by mid-2026 — that’s a full percentage point and a quarter below where we are now. Barclays and Morgan Stanley are nudging their forecasts even lower, theorizing a base rate near 3.5%. Santander isn't quite as bullish but still expects a move downward, targeting 3.75% by the end of next year.
This sharp divide comes down to how each group interprets economic signals. Brokers say inflation — which refuses to fall in line — is likely to push the Bank of England into more rate hikes or at least hold rates steady for years. Analysts at the banks are more focused on sluggish growth prospects and signs that economic cooling will force rates down. The difference between what brokers believe and what banks are saying is about as wide as it gets in today’s economic debate.
These conflicting views create real headaches for lenders and borrowers. Alpa Bhakta, Butterfield Mortgages’ CEO, said the survey results are "surprising" given the chatter from major financial institutions, pointing out that the only certainty now is uncertainty. Lenders are being encouraged to keep nimble; regulatory landscapes are shifting, and there’s no consensus on whether inflation or growth will win out. That's leaving both brokers and bank analysts watching economic data more closely than ever. With conflicting outlooks, one thing's clear: when it comes to the future of UK interest rates, no one’s putting down a safe bet just yet.