January 16, 2026

Mortgage Market Refresh 2026

What Borrowers Need to Know

Starting the year, many homeowners and buyers are feeling a bit more hopeful about borrowing costs. After months of rising interest rates, lenders have begun to ease mortgage prices. This shift follows the Bank of England’s recent cuts to the base rate and growing competition among lenders.

In December 2025, the Bank of England lowered its base rate to 3.75%. This move is already influencing the deals borrowers can access. Big names like Lloyds, HSBC, and Nationwide have cut residential mortgage rates for new and remortgage customers in early 2026. This signals that borrowing is becoming more affordable after a long stretch of higher prices.

While average mortgage rates are still higher than the low points we’ve seen in the past, there’s reason to be cautiously optimistic:

  • Average fixed rates have started to come down.
  • Lenders are competing hard, especially for borrowers with strong deposits.
  • Some of the best two- and five-year fixed deals are now significantly cheaper than a year ago.
  • Experts expect rates to keep shifting throughout 2026.

That said, the actual rate you get depends on your loan size, deposit, and mortgage type. So, don’t focus too much on headline numbers — what matters most is the deal that fits your situation.

If you’re thinking about remortgaging or buying a home this year, this changing market brings both opportunities and questions. Locking in a competitive fixed rate can give you peace of mind about monthly payments. But keep in mind, rates might drop further later in 2026, so timing your decision carefully is important.

No matter where you are in your property journey, getting expert advice can really help. Through our partnership with Insight Financial Associates, we can find mortgage solutions tailored to your unique needs. This team approach helps make sure your mortgage not only works today but fits comfortably with your wider financial plans.

Sources:
https://www.theguardian.com/business/2026/jan/04/hsbc-first-big-uk-lender-cut-mortgage-rates-2026
https://www.mpamag.com/uk/mortgage-industry/market-trends/fixed-mortgage-rates-lowest-since-2022-mini-budget/559245
https://www.forbes.com/uk/advisor/personal-finance/2025/12/18/inflation-rate-update/
https://hoa.org.uk/advice/guides-for-homeowners/for-owners/mortgage-rate-forecast/