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Modest house price growth may offset easing mortgage costs

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Adam French, Head of News & Communications 01603 476154 Email Adam
07/01/2026
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Modest house price growth may offset easing mortgage costs for homebuyers this year

Analysis of new data* from Moneyfactscompare.co.uk illustrates how easing mortgage rates may allow for a modest growth in house prices in 2026 without improving or worsening current affordability pressures on first-time buyers and homemovers.


*Consumers comparing mortgage deals on moneyfactscompare.co.uk in 2025 and Moneyfacts Average Mortgage Rates.

Modest house price growth may offset easing mortgage costs for homebuyers this year

Analysis of new data* from Moneyfactscompare.co.uk illustrates how easing mortgage rates may allow for a modest growth in house prices in 2026 without improving or worsening current affordability pressures on first-time buyers and homemovers.


*Consumers comparing mortgage deals on moneyfactscompare.co.uk in 2025 and Moneyfacts Average Mortgage Rates.

First-time buyers

  • Typical first-time buyers borrowed around £236,000 in 2025
  • Average property value of around £310,000
  • Average loan-to-value (LTV) of 78% // Avg deposit of 22% 

Homemovers

  • Typical homemover borrowed around £251,000 in 2025
  • Average property value of around £466,000
  • Average LTV of 58% // 42% equity 

Remortgage borrowers

  • Typical remortgage customer borrowed around £215,000
  • Typical property value of around £460,000
  • Average LTV of 50% // 50% equity 

Average mortgage rates

Markets currently predict the Bank of England will lower the Base Rate from 3.75% to 3.25%-3.5% this year.

 

Product/Scenario 1 Jan 2026 End of 2026

90% LTV 2-yr fix

5.09%

4.80%

80% LTV 2-yr fix

4.80%

4.50%

60% LTV 2-yr fix

4.28%

4.00%

First-time buyer at 80% LTV

Borrow £236,000 → £1,352 per month

Borrow £241,900 → £1,345 per month

Homemover at 60% LTV

Borrow £251,000 → £1,364 per month

Borrow £257,275 → £1,358 per month

Remortgage at 60% LTV

Borrow £215,000 → £1,168per month

Borrow £215,000 → £1,135 per month
Source: Moneyfacts. Forecast mortgage rates assume a 0.25 percentage point Base Rate cut. Mortgage repayments assume repayments over 25 years. FTB and homemover figures assume 2.5% annual house price growth as forecasted by OBR.

 

First-time buyers

  • Typical first-time buyers borrowed around £236,000 in 2025
  • Average property value of around £310,000
  • Average loan-to-value (LTV) of 78% // Avg deposit of 22% 

Homemovers

  • Typical homemover borrowed around £251,000 in 2025
  • Average property value of around £466,000
  • Average LTV of 58% // 42% equity 

Remortgage borrowers

  • Typical remortgage customer borrowed around £215,000
  • Typical property value of around £460,000
  • Average LTV of 50% // 50% equity 

Average mortgage rates

Markets currently predict the Bank of England will lower the Base Rate from 3.75% to 3.25%-3.5% this year.

 

Product/Scenario 1 Jan 2026 End of 2026

90% LTV 2-yr fix

5.09%

4.80%

80% LTV 2-yr fix

4.80%

4.50%

60% LTV 2-yr fix

4.28%

4.00%

First-time buyer at 80% LTV

Borrow £236,000 → £1,352 per month

Borrow £241,900 → £1,345 per month

Homemover at 60% LTV

Borrow £251,000 → £1,364 per month

Borrow £257,275 → £1,358 per month

Remortgage at 60% LTV

Borrow £215,000 → £1,168per month

Borrow £215,000 → £1,135 per month
Source: Moneyfacts. Forecast mortgage rates assume a 0.25 percentage point Base Rate cut. Mortgage repayments assume repayments over 25 years. FTB and homemover figures assume 2.5% annual house price growth as forecasted by OBR.

 

Adam French, Head of News at Moneyfactscompare.co.uk, said:

“After more than three years of higher borrowing costs, even small cuts in mortgage rates can have a meaningful effect on buyer behaviour. With markets expecting at least one further 0.25 percentage point cut to the Base Rate, the mortgage landscape in 2026 may be more forgiving than at any point since 2021.


“Our modelling suggests that easing rates may make modest house price growth possible without stretching affordability further, an important shift after the intense affordability squeeze of 2022–2025.


“First-time buyers still face the steepest challenges, with many stretching to higher LTV deals given the need to save a considerable deposit. In contrast remortgage borrowers - who typically hold far more equity and are unlikely to need to borrow more - stand to benefit most from easing rates.


“Any expectation of more substantial growth should be tempered by the fact that borrowing costs remain well above the ultra-low levels of the 2010s. Even with rate cuts, affordability is tight.


“Lower rates remove a headwind rather than create a tailwind, making modest house price growth possible, but not guaranteeing it. Unless rates fall further or incomes rise faster than expected the headroom for growth is likely to remain tight.”

Adam French, Head of News at Moneyfactscompare.co.uk, said:

“After more than three years of higher borrowing costs, even small cuts in mortgage rates can have a meaningful effect on buyer behaviour. With markets expecting at least one further 0.25 percentage point cut to the Base Rate, the mortgage landscape in 2026 may be more forgiving than at any point since 2021.


“Our modelling suggests that easing rates may make modest house price growth possible without stretching affordability further, an important shift after the intense affordability squeeze of 2022–2025.


“First-time buyers still face the steepest challenges, with many stretching to higher LTV deals given the need to save a considerable deposit. In contrast remortgage borrowers - who typically hold far more equity and are unlikely to need to borrow more - stand to benefit most from easing rates.


“Any expectation of more substantial growth should be tempered by the fact that borrowing costs remain well above the ultra-low levels of the 2010s. Even with rate cuts, affordability is tight.


“Lower rates remove a headwind rather than create a tailwind, making modest house price growth possible, but not guaranteeing it. Unless rates fall further or incomes rise faster than expected the headroom for growth is likely to remain tight.”

Notes to editors

You are welcome to use part or all of this press release, so long as we are sufficiently sourced. We would appreciate a link back to Moneyfactscompare.co.uk.

Pioneering financial comparison technology for over 35 years, Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

You are welcome to use part or all of this press release, so long as we are sufficiently sourced. We would appreciate a link back to Moneyfactscompare.co.uk.

Pioneering financial comparison technology for over 35 years, Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Contact Us If you're looking for extra comment, a chart or more information, then please give us a call. We are always more than happy to help.
Adam French Head of News & Communications
01603 476154
Email Adam
Rachel Springall Press Officer / Finance Expert
01603 476210
Email Rachel
Caitlyn Eastell Press & PR Executive
01603 476169
Email Caitlyn
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©2026 Moneyfacts Group plc. All Rights Reserved. Use of this Website constitutes acceptance of the Company’s General Terms of Use & Privacy Policy. Moneyfacts Group plc is registered in England and Wales, company no. 4063110. Registered office: Moneyfacts House, 66-70 Thorpe Road, Norwich, NR1 1BJ. Moneyfacts, MONEY £ ACTS and INTEREST are Registered Trademarks.