The 2026 mortgage cliff: 10 myths busted for homeowners in the Channel Islands

Kate Le Prevost, Assistant Manager for Business Development at Skipton International, examines what the UK’s so called “mortgage cliff” means for Channel Island households and separates the myths from the facts.

Many people have heard about a “mortgage cliff” in the UK. It describes the moment when borrowers move off older, lower fixed rates and onto today’s market rates. The Bank of England reduced its base rate to 3.75% in December 2025 and has signalled any further changes will be gradual and driven by data. In 2026, rates could ease, but not in a straight line.

So why does a UK decision matter here? Channel Island lenders price their funding using UK benchmarks, including the Bank of England base rate and the Sterling Overnight Index Average (SONIA), a key interest rate benchmark used widely across UK financial markets. When UK monetary policy changes, it influences funding costs and, over time, mortgage rates in both Jersey and Guernsey. Some local mortgages track the Bank of England base rate directly, often with a minimum “floor”.

Locally, market conditions remain mixed, with affordability and available stock shaping pricing and activity. Below, we break down ten common myths and explain what they really mean for households in Jersey and Guernsey.

10 common myths, and the facts

1. Are rates just going to keep rising?

Not necessarily. The Bank of England has signalled a cautious approach, and while rates could ease further in 2026, future moves will depend largely on inflation.

2. Does the UK ‘mortgage cliff’ means house prices will crash in Jersey?

Local drivers differ from the UK, so a crash is less likely; it may feel more like a period of adjustment. However, if you are on a very low rate today, your repayments could still rise sharply when your deal ends. Speak to your lender early, as changes such as adjusting your mortgage term might help with affordability.

3. If interest rates go down, why isn’t my fixed rate falling now?

It does not. Fixed rates only change when the deal ends, while trackers and some variable rates can move sooner, though they may include a minimum floor.

4. Do I really need a 20% deposit to buy?

Not always. Many lenders will consider a 10% deposit, depending on affordability and criteria. Skipton International also offers a 100% mortgage with a family guarantor, available in both Guernsey and Jersey.

5. Is porting my mortgage to a new property automatic?

Porting is possible but not guaranteed. You will still need a full mortgage application for the new property, along with supporting documents. Affordability and valuation criteria still apply.

6. Is extending my home always cheaper than moving?

Not always. Compare the total cost, the timeline, and the disruption before deciding.

7. If we divorce, do we have to sell the house?

There may be options, including one party buying the other out, or exploring a remortgage. Early legal and financial advice is important.

8. Will remortgaging always cost more than staying with my current lender?

Not necessarily. Sometimes a simple product transfer is the best route, but in other cases a remortgage can improve your rate, especially if your loan-to-value has changed.

9. Do all variable rates move the same way?

They do not. Standard variable rates are set by lenders, whereas base rate trackers follow the Bank of England rate and may include a floor, which stops the rate falling below a set minimum, or a cap, which prevents it rising above a fixed limit.

10. If I miss a mortgage payment, will I lose my home?

Repossession is a last resort and will not happen after only one missed payment. If you are worried, speak to your lender early.

Cost and tax changes to keep in mind

Buying costs vary by island and by how the property is held. Budget for transaction taxes and fees, plus legal and registration, court, or bond costs, and check the latest local guidance when planning.

Our pledge

• Clear guidance, no pressure. We explain your options and discuss what fits your life so you can make an informed decision.
• Local insight with UK context. We follow Bank of England decisions closely and translate them into straightforward guidance for Channel Island households.
• Support for life’s changes. From first‑time buyers to upsizers, extenders, movers, or couples separating, our team is here to help.

What to do next

1. Know your numbers and use our calculator at www.skiptoninternational.com/mortgages, then test your budget with headroom for rates, fees, and changes in income.
2. Check your product type: Fixed, tracker, or variable. If your deal ends in 2026, contact us four to six months before expiry.
3. Plan for extras. Fees add up and conveyancing can take time.