The Bank of England has cut the base rate to 3.75%, easing mortgage pressure for landlords navigating tight margins and high operating costs. The decision, made by a narrow 5-4 vote on the MPC, immediately improves affordability for those on tracker products and sets the stage for cheaper borrowing options entering the market.
New mortgage products emerge
Propertymark chief executive Nathan Emerson said the cut could save some tracker borrowers around £150 per month compared with early 2025, a meaningful shift at a time when ONS data shows UK rents rising 6.1% year on year.
Economist Isaac Stell of Wealth Club highlighted that November’s sharp drop in inflation gave the Bank “sufficient cover” to proceed with its fourth rate cut of the year, despite ongoing concerns from four MPC members still prioritising inflation control.
This improved monetary backdrop is already influencing lenders. Paragon Bank has launched a new Bank Base Rate tracker buy-to-let range, specifically structured for landlords who want flexibility during a period of expected further rate reductions in 2026. The products track Base Rate – now reduced from 4.00% to 3.75% – with no Early Repayment Charges (ERCs), allowing landlords to switch to fixed rates later without penalty.
The six-product range starts at Base Rate + 1.60%, available up to 75% LTV on a five-year term. Landlords can select from three fee options (0.75%, 1.00%, or 1.50%), with ICRs assessed at the initial rate plus 2%.
- Three products target single self-contained (SSC) properties.
- Three cater for HMOs and multi-unit blocks (MUBs).
- SSC options carry no application fee, while HMO and MUB applications are charged at £299.
Paragon has also trimmed two-year fixed-rate HMO and MUB mortgages by 15bps, with initial rates from 3.39% and LTV choices at 75% (with a £299 fee) or 65% (with a £150 fee). Landlords can opt for nil, 3.00% or 5.00% fee structures.
Paragon’s Buy-to-Let Product Manager James Harrison said the flexibility and lack of ERCs “give landlords certainty… with the ability to switch if they would prefer to lock in a fixed-rate later.” Managing director Louisa Sedgwick added that the products allow landlords to “benefit from any reduction in Base Rate” during the current downward cycle.
Specialist finance for landlords as market gears up for 2026
The launch of these tracker options dovetails with broader optimism in the sector. Stell noted that traders have sharply increased bets on further Bank Rate cuts in 2026, a shift that pushed the FTSE 100 close to 10,000 – a reminder, he said, that the stock market is not the economy but does reflect expectations of looser monetary conditions.
Letting agents in the North West, where rents have risen 7.4% annually, report a noticeable rise in landlord enquiries about refinancing and portfolio expansion. With swap rates softening and specialist lenders sharpening their offers, landlords finally appear to be moving out of a defensive stance.
Still, tight supply and strong tenant demand remain the defining features of the rental market. UK Finance data shows remortgage activity slowly climbing, suggesting landlords are preparing to reposition ahead of expected rate reductions next year.
Editor’s view
This rate environment – paired with lenders openly competing for landlord business again – marks a meaningful shift in sentiment. Paragon’s no-ERC tracker range is particularly significant, allowing landlords to ride the rate cycle down while keeping their options open. If inflation continues to cool and the Bank follows through with further cuts in 2026, landlords could finally see a path back to sustainable borrowing costs and renewed investment confidence. The open question is whether policymakers will match this momentum with a more constructive housing strategy.
Author: Editorial team – UK landlord & buy-to-let news, policy, and finance
Published: 19 December 2025
Sources: Bank of England MPC; ONS rental data; Propertymark; Wealth Club; Paragon Bank
Related reading: Buy-to-let market sees faster HMO finance as Paragon upgrades application journey
