December often feels like a pause. Transactions slow, viewings tail off, and most people mentally push “money decisions” into January. But in property finance, that pause is deceptive. December is when the smartest borrowers quietly get ready for the year ahead.

As 2025 draws to a close, the backdrop is very different to the rate-shock environment of the last couple of years.

The Bank of England base rate now sits at 4.00%, down from its 2023 peak, and markets widely expect at least one more cut, potentially taking the rate to around 3.75% as we move into 2026. Bank of England+2Cambridge Currencies+2 Inflation has eased from the extremes seen in 2022–23, with CPI running at 3.6% in the year to October, still above target but clearly trending lower than earlier in the year. Office for National Statistics+2MoneyWeek+2

Lenders have reacted in a very visible way. Fixed-rate mortgages, particularly two- and five-year products, have fallen back to their lowest levels since September 2022, and a quiet “price war” is underway as big brands compete for borrowers with strong equity and clean profiles. The Guardian At the same time, the Bank of England is still warning that millions of households will see higher payments as ultra-low COVID-era fixes mature over the next few years. The Scottish Sun

For Willow Private Finance, December is not downtime; it is a planning month. It is when high-net-worth clients, landlords, expats and business owners come to us to make sure they understand where the market really is, what 2026 is likely to look like, and how to position their borrowing accordingly. Many of the conversations we are having now build on themes we have explored in blogs such as 5 Strategic Reasons to Remortgage in 2025 (Beyond Just Rate Drops) and our specialist content on prime and complex lending.

This article is about that preparation. It is not a “rush to complete before Christmas” piece. It is about using December 2025 for clear thinking, so that when the January activity starts, you are already several steps ahead.

Market Context at the End of 2025

The simplest way to understand the current market is to look at three numbers: base rate, inflation, and fixed-rate pricing.

The base rate at 4.00% is significantly lower than the 5.25% peak reached in 2023, but it is still a world away from the near-zero rates many borrowers fixed at during the pandemic. MoneySavingExpert.com+1 Monetary policy has clearly pivoted from “aggressive tightening” to “managed easing”, but the Bank of England is moving cautiously and signalling that it will not slash rates back to old norms. Markets expect further gradual cuts through 2026, with some forecasters suggesting rates could drift towards the mid-3% range by the middle of the year if inflation continues to moderate. Money To The Masses+1

Inflation is the second driver. CPI at 3.6% is still above the 2% target, but the direction of travel is encouraging.

Energy-related pressures have eased, but core and food inflation remain sticky, with food running just under 5% on the latest figures. Office for National Statistics+1 For lenders, this means they can start to relax some of the most punitive stress assumptions, but they are not ready to declare victory and move back to pre-2022 generosity.

Finally, you can see the impact of this shift in the mortgage market itself. Two- and five-year fixed rates have fallen below 5% with several mainstream lenders, and today’s products are cheaper than anything we have seen since late 2022. The Guardian That has two consequences. For borrowers whose existing deals expire in 2026, the gap between their current rate and what they might plausibly get next year is shrinking. For new buyers and investors, especially those with strong deposits or equity, affordability is beginning to look more workable than it did even six months ago.

December 2025, then, is not a crisis moment. It is a transition point: still cautious, still disciplined, but undeniably more constructive than the environment many clients have been navigating since 2022.

Why December Is a Planning Month, Not a Waiting Room

There is a strong temptation to “park” mortgage decisions until January. The psychology is understandable: tax year planning is for March and April; mortgage planning feels like a January job. The reality is almost the opposite.

Lenders do not wait for New Year’s Day to decide how they will behave. Internal policy, affordability changes and risk appetite for 2026 are already being discussed, modelled and, in many cases, decided in November and December. What appears in January criteria sheets is usually the formalisation of work already done.

December is also when you, as a borrower, have rare breathing space. You are less likely to be rushing between viewings, auctions or aggressive completion deadlines. You have time to sit down with your broker, look at your current facilities, and ask questions that do not fit into a fifteen-minute “rate comparison” call.

For many of Willow’s clients, December 2025 is the month to ask:

• How exposed am I really if rates only fall slowly from here?
• What happens if my fixed rate ends in late 2026, not mid-2025?
• How will lenders treat my foreign income, carried interest or company profits under 2026 rules?
• Should I be thinking about restructuring now, while the market is calmer?

Those are not questions you want to be asking in the first working week of January, when lenders’ pipelines fill and service levels come under pressure.

What Early 2026 Is Likely to Look Like for Borrowers

No one can promise what the Bank of England will do at every meeting in 2026, but we do have decent visibility on trajectory.

Markets are currently pricing a high probability of at least one more quarter-point cut to 3.75% around the December MPC meeting, and several independent forecasters expect base rate to drift lower through 2026 as inflation continues to normalise. HomeOwners Alliance+1 At the same time, bodies such as the OECD are warning that Reeves-era fiscal tightening and higher tax burdens will weigh on households and may temper growth, even if the UK outperforms some large European economies. The Guardian

For borrowers, “lower but not low” is the most realistic base-case. A world where base rate is hovering in the 3–4% range is still a fundamentally different environment from the 0.1% era of 2020–21, and the Bank of England has been clear that the ultra-cheap money period is not coming back.

You therefore need a 2026 plan that assumes:

• Mortgage pricing may improve, but it will not collapse to old levels.
• Affordability tests will stay more conservative than pre-2022 norms.
• Lenders will continue to look hard at overall resilience, not just nominal income.

Private banks will remain especially focused on net worth, liquidity buffers and the quality of underlying assets. Many of the cases we write at Willow now involve balancing traditional affordability with a broader narrative about the client’s financial strength, similar to those described in our prime-focused content such as Funding Seven-Figure Lease Extensions in Prime Central London and Buying Off-Market in Prime Central London: Proof of Funds, Exchange Timelines & Bridge-to-Term Strategy.

Understanding that landscape now, in December, is far more valuable than reacting to it when you are already mid-application.

Using December to Benchmark Your Current Position

A useful December exercise is simply to benchmark where you stand today against where you will be when your next major decision hits.

If your fixed rate ends in 2026, December 2025 is the right moment to understand the new reality. The base rate is 4%, inflation is in the mid-3s, and fixed mortgage rates have broken down to their lowest level since late 2022. Bank of England+2Office for National Statistics+2 You can model, with your broker, what your monthly payment looks like in a range of plausible scenarios: no further cuts, one cut in December followed by a pause, or a slow glide path lower.

If you are an investor, you can map rental income, tax changes, and likely refinancing costs against your portfolio.

Many landlords who were forced into caution in 2023 and early 2024 are finding that the numbers look rather more constructive now, especially where rents have been rebased but debt levels are stable. That does not mean indiscriminate leverage is back in fashion, but it does mean there may be opportunities to restructure borrowing in ways that were not viable even a year ago.

For expats and internationally mobile clients, December is a good time to reconcile your income in different jurisdictions, cross-check how exchange rate moves have affected sterling-equivalent earnings, and plan what documentation you will be able to supply once lenders ask for 2025-year-end numbers. When we are working on complex international cases or prime London acquisitions like Mansion Block Mortgages in Prime Central London, that forward planning is critical.

Getting Ahead on Documentation Before the January Rush

Every January, a familiar pattern plays out. Lenders ask for the “latest” documents. Borrowers send what they have. Underwriters come back once the next payslip, bank statement or set of accounts is generated. Weeks are lost while the file waits for updated paperwork.

December is when you can break that pattern.

For employed borrowers, that may mean getting a clear, written confirmation of bonuses or variable pay where appropriate, and making sure you understand how that income is likely to be treated by different lenders. For company directors, it can mean discussing with your accountant whether draft 2025 accounts will be available in time for your planned application window, and how your mix of salary, dividends and retained profits will look to an underwriter.

For high-net-worth clients, it is often about assembling a clean, coherent picture of your balance sheet: portfolio statements, liquidity schedules, trust documentation and any existing borrowing against assets. Private banks will still be choosy in 2026, but they are working in a more benign rate environment than they were a year ago. That is an opportunity if you can present your position clearly.

When Willow is mandated on complex high-value transactions, particularly those involving refurbishment, lease extensions or off-market purchases, the difference between a client who has used December to prepare and one who hasn’t is obvious. The former can move quickly when a lender or vendor is ready; the latter ends up scrambling for documents at the very point they should be negotiating from strength.

Turning Reflection into a Concrete 2026 Finance Plan

Reflection is only useful if it leads to decisions. For many of our clients, December 2025 conversations coalesce around a simple but structured plan for the next 12–18 months.

That plan usually sets out when each facility will be reviewed, how much flexibility is needed, and where there may be scope to improve terms or release capital. It takes into account likely movements in base rate, but it does not rely on heroic forecasts. Instead, it focuses on resilience: stress-testing your borrowing against slightly higher and slightly lower rates, ensuring you could cope with slower-than-expected cuts, and identifying which parts of your structure are most sensitive.

In some cases, that leads to immediate action: an early remortgage, a restructuring from personal to corporate borrowing, or a move from a mainstream lender into a private bank that better understands your profile. In others, the plan is simply to prepare everything now and be ready to move quickly in Q1 or Q2 when a target property or refinancing opportunity arises.

What matters is that you enter 2026 with a deliberate approach, not vague intentions.

How Willow Private Finance Can Help

Willow Private Finance is set up for exactly this kind of forward-looking, advisory-led work. We are whole-of-market, independent and used to dealing with situations where there is no obvious “off the shelf” answer: high-value London homes, complex legal structures, international income, trust assets, investment portfolios and cases where wealth and taxable income do not neatly align.

In December, much of our work is quiet groundwork. We review your existing loans, map out timelines, stress-test affordability under realistic 2026 rate assumptions, and identify which lenders are likely to be the best fit for your profile. We then help you assemble the documentation and narrative that will allow those lenders to say “yes” quickly when you decide it is time to move.

That is how you make December count. You use it for thinking, preparation and strategy, so that when everyone else wakes up in January and starts phoning their bank, you are already far ahead of them.

Frequently Asked Questions

Q1: Why is December 2025 such an important month for mortgage planning?
A: December 2025 sits at a turning point where base rate has already fallen to 4% and inflation has eased to the mid-3% range, yet lender criteria for 2026 are still being finalised. Preparing now means you can align with those changes before they appear in January policy documents.

Q2: If rates might fall again, should I just wait until later in 2026?
A: Waiting can work against you if lender stress tests or tax changes offset lower headline rates. Markets do expect further modest cuts, but there is no return to ultra-low COVID-era pricing, so planning for resilience matters more than trying to time the absolute bottom.

Q3: How have fixed-rate mortgages actually changed in recent months?
A: Two- and five-year fixed rates have dropped to their lowest levels since September 2022, with several major lenders now offering sub-5% products and actively cutting pricing to compete.  That creates better options for borrowers who were facing much higher offers earlier in 2025.

Q4: I fixed at a very low rate during the pandemic. What should I do now?
A: The Bank of England has warned that millions of households will see higher payments as ultra-low fixes roll off, even though today’s base rate is lower than its 2023 peak. December is a good time to model the likely increase and explore remortgage or restructuring options early.

Q5: How can Willow Private Finance help me get ready for 2026?
A: Willow can review your current borrowing, model different 2026 rate scenarios, explain how lenders are likely to view your income and assets, and prepare your documentation so you are ready to move quickly in the new year. Our experience with private banks, complex structures and international cases means we can position you effectively before the January rush begins.

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