INTEREST RATES WILL NOT FALL BELOW 3.75%

Santander, the banking giant, has forecast that interest rates will drop to 3.75% by the end next year. This is a departure from recent predictions of even more aggressive rate cuts.

By Christmas 2025, the Bank of England's base rate of 5% would represent a reduction of 1.25 percentage points.

Santander's predictions come just days after Goldman Sachs predicted that rates would drop to 2.75% in the same time period, raising eyebrows.

Santander's economists also predict that UK rates of interest are likely to remain between 3 and 4 percent for the near future.

The mortgage rate is unlikely to change much in the future if the forecast is correct.

The fixed-rate mortgages are priced with future interest rate reductions already included.

The lowest-priced five-year fixed-rate products hover just above 3.75%, instead of being closer to the Bank of England's base rate of 5 percent.

Santander's predictions are in stark contrast with Goldman Sachs. The Wall Street giant's economists now predict that UK interest rates will drop to 2.75% over the next year.

The Bank of England would have to cut much more than Santander and the market currently expect.

Mortgage brokers are out in force to express their concern over Goldman Sachs' accuracy and the fear that this could affect borrowers' decisions.

People may choose to opt for shorter-term fixed deals or 2-year trackers, hoping they can take advantage of falling rates.