MORTGAGE & INTEREST RATE OUTLOOK 2026

Our In-House mortgage advisor Phil Terry gives his opinions on the much more positive news surrounding the outlook in early 2026 for mortgages and interest rates.

�� Mortgage & Interest Rate Outlook — January 2026

As we begin 2026, the UK mortgage market is showing positive signs for buyers and movers, even amid ongoing economic caution.

�� Interest Rates & Mortgage Costs

�� After a series of interest rate reductions through late 2025, the Bank of England’s base rate now sits lower than it did a year ago, and further modest cuts are widely expected this year as inflation continues to ease. Many economists and lenders are pricing in potential reductions of the base rate towards around 3.25%–3.5% in 2026, which would support more competitive mortgage pricing.

�� In response, major mortgage lenders have already cut headline rates, creating a more competitive market — with some fixed-rate deals now at their lowest levels in years.

�� What this means for borrowers:

• Fixed-rate mortgages (2–5 year) are trending down, improving affordability.
• Competition among lenders has sparked a “mortgage price war”, offering good opportunities for both homebuyers and remortgagers to secure attractive deals.

�� Housing Market Context

Despite these improving finance conditions:

• House prices across the UK are expected to rise modestly in 2026, supported by lower borrowing costs — with some forecasts suggesting 2–4% growth nationally.
• Regions in the North of England (including Yorkshire and surrounding areas) are often expected to outperform the national average in terms of growth and activity due to stronger affordability and local demand drivers.

�� Market Drivers to Watch

✔ Inflation trends: Inflation remains above target but is expected to move closer to the Bank of England’s 2% goal in 2026, reinforcing the case for lower rates.
✔ Affordability: As interest rates ease, mortgage costs as a share of income improve — particularly helpful for first-time buyers.
✔ Remortgaging wave: Around 1.8 million fixed mortgages are due to expire this year, meaning many households will be actively looking to lock in favourable new terms.

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�� What This Means for You

✅ Buyers — falling rates and more competitive mortgage deals are boosting borrowing power, making now a compelling time to explore the market.
✅ Sellers — continued buyer interest and moderate price growth prospects support ongoing demand, especially in regions like North Yorkshire.
✅ Remortgagers — with many fixed deals maturing this year, reviewing options early could secure better long-term rates.

Our in-house Financial Service advisor Phil Terry is here to offer you independent and impartial mortgage advice – Please call your local office of Beadnall Copley to book an appointment to speak with him.

Ripon: 01765 698100, Wetherby: 01937 580850, Harrogate: 01423 503500