Base Rate Expected to Rise Twice in 2026 — What It Means for Equity Release

What the NACFB Expo forecast means

At the NACFB Expo on 10 June 2026, an economist from HSBC outlined a base rate outlook that diverges sharply from the rate-cut narrative that dominated early 2026 forecasts. Two base rate rises are expected before the end of December 2026, driven in part by geopolitical factors — specifically the impact of renewed Iran/Middle East conflict on energy prices and inflation expectations — that have reversed the trajectory market participants were pricing in earlier in the year.

The Bank of England held the base rate at 3.75% at the April MPC meeting, in an 8-1 vote. The next MPC meeting is scheduled for 18 June 2026. If the HSBC forecast is borne out, the base rate could reach 4.0%–4.25% before the end of the year.

For equity release applicants, the question is what that means for the rates available on new lifetime mortgage plans.

Current lifetime mortgage rates — June 2026

As of June 2026, the competitive range for lifetime mortgage rates sits at 6.49%–6.78%, according to data from over50choices.co.uk and Equity Release Warehouse. The Equity Release Council's Summer 2025 market report recorded an average advertised rate of 7.24% across all products — which means the current June 2026 competitive rates are notably below the broader market average.

If base rate rises as forecast and lenders pass those moves through to product pricing, rates on new lifetime mortgage applications could move above 7% for new applicants later in 2026. Existing lifetime mortgage plans are unaffected — the rate is fixed for the life of the plan.

Why the fixed rate matters so much for lifetime mortgages

Unlike a standard residential mortgage where you remortgage every two to five years, a lifetime mortgage fixes your interest rate at the point of drawdown and that rate applies for the entire life of the loan. There is no refinancing event. Whatever rate is agreed when the plan is set up is the rate that compounds against your outstanding balance for as long as the plan remains active.

The compounding effect of a rate difference over a 15–20 year horizon is significant. A 0.25% difference at outset on a £100,000 initial drawdown could mean thousands of pounds in additional interest over the life of a plan. For homeowners who are exploring equity release and could proceed in the current rate environment, the potential for rates to move materially higher is a reasonable factor to weigh — alongside all the other considerations relevant to their circumstances.

All plans written by Equity Release Council members include a no negative equity guarantee, meaning the amount owed can never exceed the value of your home when it is sold.

Timing should not be the only factor

It would not be appropriate to present rate timing as the primary reason to take out equity release. Equity release is a long-term financial commitment that affects your estate, could influence your entitlement to means-tested benefits, and involves an ongoing compounding liability. These considerations typically outweigh a short-term rate window in a properly conducted advice process.

What rate awareness does is add a relevant data point to a decision that should be made on a range of factors, including:

• Whether you need the funds now, or whether a drawdown facility would better match your actual usage pattern
• The long-term compounding impact under different rate scenarios
• Whether your estate planning goals are compatible with the likely outstanding balance at the time of repayment
• Whether a retirement interest-only mortgage, which requires monthly interest payments but leaves no compounding balance, could be a better fit for your circumstances
• Your current entitlement to means-tested benefits and whether releasing equity could affect it

An FCA-regulated adviser working to Equity Release Council standards will consider all of these factors and is required to recommend equity release only where it is demonstrably suitable for your circumstances. Learn more at lifetime mortgages, equity release rates, and equity release calculator.