2026 will be a ‘boom’ year for the mortgage market thanks to falling interest rates and a ‘plethora’ of deals for borrowers to choose from.
This is according to Moneyfacts, which has compiled figures to reveal an optimistic outlook for anyone taking out a mortgage next year.
For a start, product choice has increased dramatically: there are now 7,158 mortgage deal options, which is 650 more than this time last year. This is the highest since 2007.
There is also good news for first-time buyers, as the number of deals for borrowers with a 5% or 10% deposit is also at an 18-year high, according to Moneyfacts.
Having a wide choice of deals bodes well for borrowers and the real estate market in general. Emma Jones, director of Runcorn-based Whenthebanksaysno.co.ukexplained to Newspage that this was a “huge milestone.” She added: “The availability of deals at higher loan-to-value ratios is especially important to get the market moving. If interest rates continue to fall, real estate transactions will move in the opposite direction.”
And Stephen Perkins, director of Norwich-based Yellow Brick Mortgagestold Newspage, this meant now was a good time to think about buying.
“The abundance of products available to borrowers,” he said, “particularly for those with low deposits, the largest since 2007, shows that this is an excellent time to buy or move.
“However, the wide choice also emphasizes the need for professional advice in selecting the most suitable product for your circumstances, as big savings can be made. A better choice is always a good thing, but people must choose well.”
Mortgage interest rates are falling
Meanwhile, Moneyfacts figures also showed that while there was a wide range of offers, rates were also falling. The average rate for a fixed-rate mortgage was even below 5% at the beginning of the year.
The average two-year fixed mortgage rate fell in January and now stands at 4.83% – down 0.03% month on month. The typical five-year fixed rate remained unchanged at 4.91%.
Moneyfacts’ average mortgage interest rate fell from 4.91% to 4.87% month-on-month. On an annual basis, interest rates have fallen by 0.53%, compared to 5.40% in January 2025.
Thanks to the Bank of England’s rate cut in December, the average two-year variable mortgage rate fell from 4.66% over the month to 4.44%. Over the year it fell 1.03% from 5.47%.
Rachel Springall, financial expert at Moneyfacts, said: “Expectations are high for a booming market in 2026. Mortgage rates are lower year on year and the choice of deals is plentiful.
“The easing of stress tests and expectations for further rate cuts will help ease affordability constraints for borrowers.
“First-time buyers will not be left behind by this progress, as deals aimed at those with low deposits are now at their highest level for almost 18 years. However, more progress to support disadvantaged buyers would be welcome amid a lack of affordable housing.”
Springall said new buyers could also benefit from more innovation in 2026, as lenders expand their options and regulations evolve to support more borrowers.
Will there be more mortgage rate cuts in 2026?
“The start of a new year typically sees a slow repricing of mortgages,” Springall added, “but lower swap rates should encourage lenders to implement rate cuts in the coming weeks.
“As we have seen in recent months, fixed rate cuts have been plentiful, fueling a healthy decline in the average two-year mortgage rate. Many lenders appeared to be passing on the Bank of England’s cuts before the base rate was cut.”