“Expectations are high for a booming market in 2026”
Mortgage pricing and availability improved through 2025, leaving the market on a firmer footing at the start of 2026, with fixed rates below 5% and product numbers at their highest level since before the financial crisis, according to Moneyfacts.
The price comparison site’s latest UK Mortgage Trends Treasury Report shows there are now 7,158 residential mortgage products available, an increase both month on month and by 650 options compared with a year earlier. The current tally is the highest since October 2007, when 7,421 products were recorded, while availability at 90% and 95% loan-to-value has climbed to near 18-year highs.
The average shelf life of a mortgage product has also lengthened, with Moneyfacts noting that the typical deal now remains on sale for 21 days before being withdrawn or repriced.
At the start of January 2026, the average two-year fixed mortgage rate had fallen to 4.83%, continuing a gradual downward trend and easing by 0.03 percentage points over the month, following a 0.08 percentage point fall between November and December 2025. The average five-year fixed rate was unchanged at 4.91%.
The overall Moneyfacts Average Mortgage Rate edged down from 4.91% to 4.87% over the month and is 0.53 percentage points lower than in January 2025, when it stood at 5.40%.
Variable pricing has also improved. The average two-year tracker rate dropped from 4.66% to 4.44% over the month and has fallen by 1.03 percentage points over the year, from 5.47%. Moneyfacts attributed the downward move to reductions in the Bank of England base rate.
For borrowers reaching the end of an existing fixed term, the incentive to refinance has strengthened. The average standard variable rate now stands at 7.25%, down from 7.81% a year earlier, although still below its peak level of 8.19% recorded in November and December 2023. Fixed rates remain significantly lower than typical revert-to rates, widening potential savings for those who switch.
Rachel Springall (pictured right), finance expert at Moneyfacts, said conditions in 2025 had set a more optimistic tone for the year ahead. “Borrowers and lenders will be in a state of optimism, off the back of a positive 12 months for the mortgage market in 2025,” she stated.
“Expectations are high for a booming market in 2026. Mortgage rates are lower year-on-year, and the choice of deals is abundant. The relaxation in stress testing and expectations for further rate cuts will help ease the affordability constraints on borrowers.
“First-time buyers are not being left behind by this progress, as deals aimed at those with a low deposit now stand at their highest levels for almost 18 years, yet 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, laid out in its ‘Roadmap’ for the mortgage market.”
Springall noted that recent trends in swap rates could influence lenders’ next moves on pricing. “The start to a New Year is typically a slow burner for mortgage re-pricing, but lower swap rates should incentivise lenders to pass on rate cuts in the coming weeks,” she said.
“As we have seen over the past few months, fixed rate cuts have been in abundance, fuelling healthy drops to the average two-year fixed mortgage rate, and many lenders appeared to pass on cuts by the Bank of England ahead of reductions to the base rate. Amid hopes of more cuts to come among borrowers, the appetite for a shorter-term fixed deal could outweigh the appeal of longer-term fixed mortgages.”
Springall also highlighted the potential savings available to remortgage customers, particularly those reverting from older low fixed rates agreed in 2020. “Remortgage customers stand to make substantial savings when moving off a revert rate if they switch to a two-year fixed deal,” she pointed out.
“Moving off the average revert rate of 7.25% to the average two-year fixed rate at 60% LTV of 4.28%, remortgage customers could save over £5,000 in repayments over one year, based on a mortgage of £250,000 over 25 years. As it stands, there is a rate difference of 0.28% on the average two-year fixed deal at 60% LTV versus the five-year fixed equivalent, so a shorter term may seem more appealing for those coming off a low fixed rate. UK Finance expects a 10% rise in external remortgaging in 2026, and 1.8 million fixed rate mortgages are due to come to an end this year.
“However, some of these will include buyers who managed to lock into a cheap rate in 2020, so they will need to seek advice for support if they are concerned about rising repayments by moving onto a higher fixed rate.”
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