Relief for borrowers as mortgage affordability expected to improve

Mortgage payments could reach their most manageable level in almost five years.

After years of relatively high rates which have stretched the finances of many households, mortgage affordability could improve in 2026.

Average mortgage payments are estimated to make up around 40-41% of the average gross salary later this year, a level last seen in 2021, according to analysis from INTEREST by Moneyfacts.

By contrast, average mortgage payments hit 49.1% of an average gross monthly salary in June 2024, falling to 45.1% in June 2025.

This improvement in affordability is based on several assumptions, including that inflation will ease closer to the Bank of England’s target of 2% and that average mortgage rates will settle around 4.25% to 4.50%.

The analysis also assumes that wages will grow by 3.2%* and that house prices will increase by around 2.5%**.

“Mortgage affordability is moving in the right direction, and that will come as a real relief to borrowers who have endured a few really tough years,” Adam French, Head of Consumer Finance at Moneyfacts, noted.

How low will mortgage rates go?

Even though mortgage rates are expected to continue declining in 2026, “many fixed rate lenders will have already factored forecast rate cuts into their product pricing to some extent,” French explained.

As a result, he adds that “just how far mortgage rates will fall remains to be seen”.

While the prospect of lower mortgage rates is encouraging for existing and prospective homeowners alike, French warns that “the era of ever-cheaper borrowing is firmly behind us”.

In 2020 and 2021, mortgage rates hit historic lows, largely because the Bank of England base rate stood at just 0.1%. This helped borrowers access relatively cheap mortgages and achieve their homeownership goals but, if they secured a five-year fixed deal at these low rates, they are likely to see their monthly mortgage payments increase significantly when their current deal ends in the coming months.

Indeed, the Bank of England estimates that 3.9 million households will refinance onto higher rates over the next three years.

Discover the latest mortgage rates

For an up-to-date list of the lowest mortgage rates currently available, visit our mortgage charts.

Alternatively, our weekly mortgage roundup features the lenders that offer the lowest fixed rates in the remortgage, homemoving and first-time buyer sectors, as well as highlighting some deals that feature on our Moneyfacts Best Buy charts, based on their overall cost.

Getting tailored support

Even though overall mortgage affordability may be improving, every borrower’s situation is different.

For example, the type of property you want to buy and the region it’s in, as well as your own individual financial circumstances, will influence how affordable it is to get a mortgage.

Some borrowers may find it easier to remortgage or buy a new home than in recent years, but others may still struggle to save up a sufficient deposit and access the most competitive mortgage deals.

This is why it can be useful to speak to a professional mortgage broker. They will be able to offer more tailored advice on your individual situation and help you find the most suitable mortgage for your requirements.

Speak to an award-winning mortgage broker today

* Economic Evidence to the Pay Review Bodies 2026-27 Pay Round

** OBR economic and fiscal outlook, Nov 2025