Mortgage Rates Could Fall Further as Lender Competition Intensifies

Recent commentary from mortgage brokers and analysts suggests that mortgage rates may fall again in the coming weeks, driven largely by increased competition between lenders.

According to newly published data from Moneyfacts, the number of mortgage products currently available is at its highest level in 18 years, pointing to a more competitive and flexible lending environment. Expectations are now building for what some analysts are describing as a potentially strong mortgage market during 2026.

What’s Driving the Optimism?

Mortgage rates have already fallen over the last year, with the average two-year fixed rate dropping below 5% in August 2025 for the first time since the market turbulence following the September 2022 mini-budget. Rates have continued to edge down since, and further modest reductions are being predicted early this year.

At the same time, lenders appear to be loosening affordability criteria, particularly for first-time buyers. This includes:

• Higher income multiples where affordability allows

• Low or zero-deposit mortgage products

• Greater use of family support structures, such as joint borrower, sole proprietor mortgages

Moneyfacts has noted that first-time buyers are not being left behind by recent improvements in mortgage availability, despite ongoing affordability pressures.

Fixed-Rate Borrowers Still Face Challenges

While falling rates are welcome news, they will not benefit everyone immediately. More than 80% of mortgage holders are on fixed-rate deals, meaning their interest rate will not change until their current product expires.

For many borrowers, this still presents a potential financial shock when refinancing, particularly for those coming off historically low fixed rates. Around 1.8 million borrowers are expected to reach the end of their fixed deals this year, which is likely to intensify competition among lenders even further.

First-Time Buyers: A Mixed Picture

Buying a first home remains a significant financial stretch, and the supply of suitable properties is still limited in many areas. However, rising wages mean that mortgage costs as a proportion of income are at their lowest level for several years for first-time buyers.

Regulatory changes have also given lenders greater flexibility, encouraging the development of new products designed to help buyers onto the property ladder. That said, affordability remains highly sensitive to local prices and individual circumstances.

A Market of Local Differences

Although there is talk of pent-up demand following the Budget and the festive period, market conditions remain highly localised. Some earlier industry forecasts suggested that overall sales volumes in 2026 could still fall compared with 2025.

House prices, however, have been relatively stable. The market has clearly moved on from the post-Covid “red-hot” conditions, with buyers now more cautious and price-sensitive. A persistent challenge remains the gap between seller expectations and buyer affordability, with many sellers still pricing as though it were 2022.

Navah Consulting’s View

From our perspective, the mortgage market is undoubtedly becoming more competitive and more flexible, which is positive for buyers in principle. However, lower rates alone do not guarantee a stronger housing market.

For buyers, especially first-time buyers, careful consideration of affordability, condition, and long-term costs remains crucial. More generous lending criteria can increase choice, but they can also increase risk if underlying property issues or future interest rate changes are overlooked.

For sellers, realistic pricing remains key. While rates are easing, buyers are far more analytical than in recent years and are less willing to stretch beyond perceived value.

As ever, local market conditions, property condition, and professional advice play a vital role. A competitive mortgage market can help facilitate transactions, but sound decisions are still driven by good information and proper due diligence.

Professional Property Services from Navah Consulting

In a changing interest rate environment, clear professional advice is essential. Navah Consulting provides a range of RICS-regulated surveying and valuation services, including:

RICS Home Survey Level 2 and Level 3 (HomeBuyer Reports and Building Surveys)

RICS Valuations for purchase, sale, probate and taxation

Reinstatement Cost Assessments for insurance purposes

Defect Analysis and condition investigations

Contract Administration for repair and refurbishment works

Our advice is practical, jargon-free and grounded in local market knowledge, helping clients make informed decisions with confidence.

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