2026 UK Mortgage Market Outlook: What Every Homebuyer Needs to Know Now

If you’re thinking about buying a home, remortgaging, or just trying to make sense of where the UK mortgage market is heading this year, you’re in the right place. The mortgage landscape in 2026 is shaping up to be quite different from what we’ve seen recently, and mostly in a good way for borrowers.

According to IMLA’s latest report, ‘The New Normal”, prospects for 2026 and 2027, total gross mortgage lending is projected to reach around £320 billion in 2026 and £350 billion in 2027. That growth is set to be driven by lower mortgage rates and a gentle easing of mortgage regulations, which together make it easier for more of us to borrow sensibly.

For house purchases specifically, IMLA forecasts approximately £205 billion of lending in 2026 and £225 billion in 2027. This should translate to a busier market than last year, but still measured rather than manic. The ongoing shortage of homes for sale, especially in London, should keep things competitive in desirable areas without pushing activity into “frenzy mode.”

This should mean more choice, calmer bidding, and lenders who are keen to help. A quick snapshot of IMLA’s 2026–27 view:

• Gross mortgage lending: ~£320bn (2026), ~£350bn (2027)
• House purchase lending: ~£205bn (2026), ~£225bn (2027)
• Buy-to-let lending: ~£44bn (2026), ~£48bn (2027)
• House prices: forecast to rise 3.0% in 2026 and 3.1% in 2027
• Mortgage arrears: projected to fall from 0.85% (Q4 2025) to 0.80% (2026) and 0.74% (2027)

Most lending growth is still coming via mortgage brokers, which is good news if you want expert help without the hassle

Interest Rates: The Story Everyone Wants to Hear

This is probably the bit you’ve been waiting for, and it’s genuinely good news. Interest rates are expected to keep easing throughout 2026, which is music to the ears of anyone looking for a mortgage.

The Bank of England has already cut the base rate from 4% to 3.75% in December, and experts are predicting further reductions. Most forecasters expect the base rate to settle somewhere between 3% and 3.75% during 2026, albeit slowly. This means we could see two-year fixed mortgage rates drop below 3.5% by spring 2026.

Five-year fixed rates might not fall quite as dramatically, but are expected to edge lower more gradually, so if you’re thinking about longer-term fixes, the improvements might be more modest.

This gradual decline in rates is happening because inflation is easing and the Bank of England feels more comfortable cutting rates faster than they initially thought they would. It’s exactly the kind of environment that makes mortgage shopping more pleasant than it has been for a while, and it underpins IMLA’s projections for stronger lending as regulations ease and pricing improves.

The Remortgaging Revolution of 2026

Remortgaging is going to absolutely dominate the mortgage market this year. We’re looking at about 1.8 million fixed-rate deals expiring in 2026, creating a “refinancing wave.”

External remortgaging (switching to a different lender) is forecast to jump by 10% to £77 billion, while product transfers (switching to a new deal with your current lender) are expected to grow by 2% to a massive £261 billion. These numbers tell us that if you’re currently on a fixed-rate deal that’s coming to an end, you’re definitely not alone. And because most lending growth continues to come via mortgage brokers, working with a broker puts you right where lenders are most active.

On the positive side, with rates falling and lenders competing heavily for business, you’ll likely have access to much better deals than when you first took out your current mortgage. The key is to start the process early to avoid any delays, and we would suggest contacting us six months before your current product expires so we can review the entire market against what your current lender is offering.

If your fixed rate is ending this year, don’t wait until the last minute. Most lenders allow you to reserve a rate up to six months before your current deal expires, so you can lock in a good rate even if it takes a few weeks to process your application.

What This Means for Different Types of Buyers

First-Time Buyers

The combination of falling rates and a more measured market creates some genuine opportunities for first-time buyers. You’ll benefit from:

• Lower borrowing costs as rates continue to fall
• Less frenzied competition from other buyers
• Lenders who are actively looking for new business
• More time to find the right property without feeling pressured

The key is to get your finances in order early and speak to a mortgage broker who can help you understand your options and potentially reserve rates in advance.

Moving Up the Property Ladder

If you’re looking to move to a bigger property, 2026 could be your year. The modest growth in the house purchase market suggests you won’t be competing with huge numbers of other buyers, and falling rates will help with affordability if you need to borrow more than your current mortgage.

Buy-to-Let Investors

IMLA expects buy-to-let lending to rise to about £44bn in 2026 and £48bn in 2027, helped by lower rates and a gradual easing of mortgage rules. That said, new government regulation, including the Renters’ Rights Act, plus existing tax changes still shape returns and affordability tests. In other words there’s growth, but picking the right structure and lender matters more than ever, and we’ll help you stress-test the numbers.

What Lenders Are Looking For

With lending growth expected and competition heating up, lenders are generally in a positive mood about taking on new business. However, they’re still maintaining sensible lending standards. This means:

• Having a good credit score remains important
• Proof of stable income is still essential
• A reasonable deposit will get you the best rates
• Professional mortgage advice can make a real difference in finding the right deal

Getting Ready for Your 2026 Mortgage Journey

Whether you’re buying for the first time, moving house, or remortgaging, here’s what you should be doing now:

Start Early: With 1.8 million deals expiring and rates potentially improving further, mortgage applications could get busy. Starting your process early gives you more options and less stress.

Check Your Credit: Now’s a great time to check your credit score and address any issues before you apply. Even small improvements can make a difference to the rates you’re offered.

Speak to a Professional: With so much change in the market and increasing complexity in mortgage products, professional advice isn’t just helpful, it’s pretty much essential. A good mortgage broker will help you navigate the options and potentially save you thousands of pounds.

Keep an Eye on Rates: While rates are generally falling, they don’t all move at the same pace. Some lenders might be quicker to pass on rate cuts than others, so it pays to shop around or work with someone who can do this for you.

The Bottom Line for 2026

The UK mortgage market in 2026 is shaping up to be more borrower-friendly than we’ve seen for several years. Falling rates, steady lending growth, and a measured market all create opportunities for homebuyers and those looking to remortgage.

The key to making the most of these conditions is preparation and timing. Whether you’re a first-time buyer excited about getting on the property ladder, someone looking to move to a bigger home, or facing the end of a fixed-rate deal, starting your mortgage journey early and getting professional advice will put you in the best position to benefit from what 2026 has to offer.

Remember, while we can make educated predictions about where rates and the market are heading, the mortgage world can still surprise us. Having a knowledgeable broker in your corner means you’ll be ready to adapt to whatever changes come along and grab the best opportunities when they arise.

The mortgage market might be complex, but your path through it doesn’t have to be. With the right preparation and support, 2026 could be the year you get exactly the mortgage deal you’re looking for.

Contact Coreco

If you want to know more, plan ahead and speak to one of our friendly down-to-earth brokers by calling us on 020 7220 5110 or click here.

Happy New Year!

Source: IMLA, “The new ‘normal’ – prospects for 2026 and 2027” (Rob Thomas, Principal Researcher).