Our forecast that Bank Rate will be cut from 4.50% now to 3.50% in early 2026, which would be further than to the low of 3.75% that investors currently expect, explains why we think the average mortgage rate will fall to around 4.0% in 2026. While the recent rise in gilt yields may put some upward pressure on mortgage rates in the near-term, we still forecast above-consensus house price inflation of 3.5% in Q4 2025 and 4.5% in Q4 2026.