Mortgage rate cuts and rising product choice is setting the stage for a positive 2026 for borrowers, research claims.
Analysis by Moneyfacts found product choice overall rose month-on-month to 7,158 options in January.
Year-on-year, there are now 650 more deals available to borrowers. The latest count is the highest since October 2007 (7,421). Deals at 90% and 95% LTV brackets sit at near 18-year highs, according to Moneyfacts.
Fixed mortgage rates remain below 5% to start 2026. The average two-year fixed mortgage rate continued its downward trend, now 4.83% to start January 2026, down by 0.03% month-on-month, a marginal drop versus the 0.08% recorded at the start of December 2025. The average five-year fixed rate remained unchanged at 4.91%.
‘State of optimism in mortgage market’
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers and lenders will be in a state of optimism, off the back of a positive 12 months for the mortgage market in 2025.
“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.”
Springall added that more progress to support underserved buyers would be welcomed amid a lack of affordable housing.
She said: “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.
“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. 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.”
‘Welcome signs for the mortgage and property market’
Commenting on the data, Mary-Lou Press, president of NAEA Propertymark, said: “Falling mortgage rates and a growing range of products are welcome signs for the property market in 2026, particularly for first-time buyers accessing higher loan-to-value deals. However, improved lending conditions must be matched by increased housing supply to ensure more people can turn affordability gains into homeownership.
“With many fixed-rate deals ending this year, professional advice will be vital in helping households navigate their options and maintain confidence in the market.”
Analysis by Moneyfacts found product choice overall rose month-on-month to 7,158 options in January.
Year-on-year, there are now 650 more deals available to borrowers. The latest count is the highest since October 2007 (7,421). Deals at 90% and 95% LTV brackets sit at near 18-year highs, according to Moneyfacts.
Fixed mortgage rates remain below 5% to start 2026. The average two-year fixed mortgage rate continued its downward trend, now 4.83% to start January 2026, down by 0.03% month-on-month, a marginal drop versus the 0.08% recorded at the start of December 2025. The average five-year fixed rate remained unchanged at 4.91%.
‘State of optimism in mortgage market’
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers and lenders will be in a state of optimism, off the back of a positive 12 months for the mortgage market in 2025.
“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.”
Springall added that more progress to support underserved buyers would be welcomed amid a lack of affordable housing.
She said: “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.
“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. 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.”
‘Welcome signs for the mortgage and property market’
Commenting on the data, Mary-Lou Press, president of NAEA Propertymark, said: “Falling mortgage rates and a growing range of products are welcome signs for the property market in 2026, particularly for first-time buyers accessing higher loan-to-value deals. However, improved lending conditions must be matched by increased housing supply to ensure more people can turn affordability gains into homeownership.
“With many fixed-rate deals ending this year, professional advice will be vital in helping households navigate their options and maintain confidence in the market.”