Stage seems set for a “booming” mortgage market in 2026

With lower rates and more mortgage products available compared to one year ago, there are reasons for borrowers to feel optimistic about the coming months.

After an encouraging 2025 for the mortgage market, the positive activity seems set to continue into the new year.

Indeed, as we entered 2026, borrowers had 7,158 mortgage deals to choose from, 650 more than in January 2025 and the highest number of deals recorded since October 2007. This is according to the latest data from the Moneyfacts UK Mortgage Trends Treasury Report.

Mortgage affordability also improved over 2025 as multiple cuts to the Bank of England base rate helped prompt lenders to lower interest rates. Consequently, the average two-year fixed rate plummeted from 5.48% at the start of 2025 to 4.83% at the start of 2026 while the average five-year fixed rate saw a slightly smaller drop from 5.25% to 4.91% over the same period.

“Borrowers and lenders will be in a state of optimism, off the back of a positive 12 months for the mortgage market in 2025. Expectations are high for a booming market in 2026,” Rachel Springall, Finance Expert at Moneyfacts, commented.

Although Springall explains that “the start to a New Year is typically a slow burner for mortgage re-pricing”, she points out that “lower swap rates should incentivise lenders to pass on rate cuts in the coming weeks”.

Compare mortgage rates

See our charts, which are updated throughout the day, to discover the latest mortgage rates.

Alternatively, our weekly mortgage roundup highlights some of the lowest rates available, alongside some alternative Moneyfacts Best Buy deals that could be more suitable and offer better value than the cheapest-priced options.

How remortgaging could save you thousands of pounds

Around 1.8 million fixed mortgages are due to end in 2026, according to UK Finance, with the trade body also expecting remortgaging activity with another lender to grow by 10% over the year.

If you’re one of these homeowners coming to the end of a fixed deal, it’s always worth comparing mortgages from other lenders as your existing provider may not necessarily offer the best-value option for you.

But, whether you stay with your current lender or switch, Springall highlights that remortgage customers could “make substantial savings” if they lock in a fixed rate rather than remaining on their lender’s Standard Variable Rate (SVR). For example, she calculates that borrowers could save over £5,000 in repayments in one year by moving off the average revert rate of 7.25% and securing a two-year fix at 4.28% (the average rate at 60% loan-to-value). Based on a £250,000 mortgage with a 25-year term.

Homeowners coming to the end of a two-year fix could make particularly significant savings as they may be able to remortgage to a much cheaper deal than their existing mortgage. At 5.93%, the average two-year fixed rate in January 2024 was 1.10 percentage points higher than at the start of 2026, so these borrowers are likely to see their monthly repayments drop when they remortgage.

On the other hand, those who locked into a five-year fixed mortgage at the end of 2020 or in 2021 when rates were relatively low may find they have no option but to move to a higher rate and face increased monthly payments when they remortgage this year.

What will 2026 bring for first-time buyers?

Prospective borrowers planning to take their first step on the property ladder may feel optimistic about achieving their goals this year, particularly as more relaxed stress testing could help to improve their chances of securing an affordable mortgage.

Moreover, the number of low-deposit mortgage deals is at its highest level for almost 18 years, with 489 products at 95% loan-to-value (LTV) and 927 at 90% LTV to choose from at the start of 2026.

And, in terms of affordability, the picture looks just as positive as the average two-year fixed rate on deals at 90% and 95% LTV dropped by 0.04 percentage points between December 2025 and January 2026 to reach 5.09% and 5.29% respectively. With potential for further base rate cuts in 2026, these rates may decline even more, further easing the affordability pressures on first-time buyers.

Despite this, Springall comments that “more progress to support underserved buyers would be welcomed amid a lack of affordable housing”.

“Innovation is set to become a key talking point this year, as expanding options for first-time buyers and modernising regulation are some of the key themes to be reviewed by the Financial Conduct Authority (FCA), laid out in its ‘Roadmap’ for the mortgage market,” she added.

The FCA confirmed that it will start consultations on proposed rule changes in early 2026 and aim to introduce the first rule changes later in the year.

Whether you’re a first-time buyer, moving house or remortgaging, it’s worth seeking professional advice from a mortgage broker if you need more support on your situation and requirements.

Speak to an award-winning mortgage broker today