From volatility to stability

The last few years have required UK households to adapt quickly. Mortgage rates rose sharply, moving from sub-two per cent pricing to levels closer to five per cent in a relatively short timeframe. For many borrowers, this shift placed real pressure on household finances, forcing budget reassessments and delaying major decisions such as moving home or refinancing.

Encouragingly, signs of greater stability emerged during 2025. The year began with the Bank of England base rate at 4.75 per cent and ended at 3.75 per cent following a cut in December - the lowest level seen since early 2023. While further reductions remain possible, the most aggressive phase of rate cuts now appears to be behind us, with financial markets increasingly pricing in a base-rate floor of around 3.5 per cent.

As we look ahead, the UK mortgage market in 2026 is shaping up to be calmer, more predictable and more strategic than the extremes borrowers have experienced since 2022.

UK property prices: Modest growth, regional differences

House price growth is expected to remain modest rather than dramatic, reflecting a more balanced relationship between affordability, wages and borrowing costs.

Industry forecasts for UK property prices in 2026 include:

• Nationwide: Approximately 2%–4% annual growth
• Rightmove & HomeOwners Alliance: Around 1%–2% growth
• Halifax: Approximately 1%–3% growth
• Office for Budget Responsibility (OBR): Around 2.5% per year

Regional performance is expected to vary. More affordable areas in the North of England and parts of the Midlands are forecast to outperform pricier markets such as London and the South East, where higher values continue to limit affordability for many buyers.

For homeowners, this suggests steady rather than speculative growth and for buyers, fewer fears of “missing out” on rapid price rises.

Bank of England base rate: What happens next?

Following the recent reduction to 3.75 per cent, markets are now pricing in further, limited cuts. Current expectations suggest the base rate could fall to around 3.50 per cent by late 2026.

Crucially, any further reductions are expected to be gradual and measured, rather than aggressive. This supports a more stable borrowing environment, where lenders can price mortgages with greater confidence and borrowers can plan with fewer shocks.

The UK mortgage market in 2026

A growing remortgage wave

The remortgaging cycle remains a key driver of market activity:

• Around 1.8 million UK borrowers are expected to reach the end of their fixed-rate deals in 2026
• This is up from approximately 1.6 million in 2025

Many of these borrowers will be transitioning from ultra-low pandemic-era five-year fixes, meaning early planning and advice will be essential to manage higher repayments and avoid last-minute decisions.

Improving affordability

Affordability is slowly improving across many parts of the UK:

• Inflation has eased
• Wages are rising faster than house prices in some regions
• Monthly payment burdens are beginning to stabilise

This is particularly positive for first-time buyers, who were disproportionately affected by the rapid rate rises of 2022–2023.

Increased lender competition

Lender competition continues to intensify. The so-called “mortgage war” may deepen as banks and building societies compete for new business, potentially leading to:

• Lower headline rates
• More flexible product features
• Greater innovation in mortgage design

Mortgage availability has also improved significantly. According to Moneyfacts, total mortgage products now stand at 7,158 deals, an increase of 650 year-on-year and the highest level recorded since October 2007.

Buy-to-let mortgages: A more challenging landscape

The outlook for buy-to-let investors remains more complex. Recent Budget measures have further reduced profitability for personally owned rental properties, with additional pressures on the horizon:

• A planned 2% increase in tax on property income from April 2027
• The implementation of the Rental Reform Bill from May 2026

These changes are likely to accelerate existing trends, including landlords exiting the market or restructuring ownership. A reduced supply of rental properties could, in turn, place upward pressure on rents and limit tenant choice across many UK regions.

Professional advice is increasingly important for landlords reviewing whether buy-to-let still aligns with their long-term financial strategy.

Outlook for 2026: Strategy over speculation

The UK mortgage market enters 2026 on a far more stable footing than it has enjoyed in several years. Lower interest rates, improved product availability and easing inflation all point towards a more balanced environment.

For borrowers, strategy will be key:

• Fixing a mortgage can provide valuable peace of mind
• Many lenders allow rates to be secured up to six months in advance of an existing deal ending
• Borrowers often retain the flexibility to switch if better deals appear before completion

In a market shaped less by extremes and more by stability, combining certainty with flexibility may be one of the most important advantages for homeowners and buyers navigating the mortgage landscape in 2026.

NOVA Wealth’s mortgage service: Expert advice at your fingertips

At NOVA Wealth, we help clients navigate the UK mortgage market with clarity and confidence.

Our mortgage service includes:

• Whole of market access – free of any lender or panel restrictions
• Fully advised service – a personalised recommendation based on your individual circumstances
• Peace of mind – we manage the entire application process for you
• Time-saving support – we do the heavy lifting on your behalf
• Cost – our mortgage advice is FREE*

Book a free consultation with NOVA today

Whether you’re remortgaging, buying your first home, moving house or reviewing buy-to-let options, expert advice early can make a meaningful difference.

*Our mortgage advice is provided at no direct cost to you. We receive a commission from the lender if your mortgage completes, which pays for the advice and service we provide.

Mortgage rates and eligibility are dependent on your personal circumstances. A mortgage is a long-term financial commitment. Your home may be repossessed if you do not keep up repayments.

NOVA is a trading name of NOVA Wealth Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 778951) and is a limited company registered in England & Wales (10739796) at 20 Farringdon Street, London, EC4A 4AB