The UK mortgage market has entered 2026 with a sense of “cautious optimism.” After a year of fluctuating expectations, the market is currently defined by a competitive “price war” among lenders, driven by a downward trend in the Bank of England’s Base Rate and a surge in product availability.
The Autumn Budget had very few announcements relating to the mortgage market and as such, we have not seen any negative impacts to pricing. As of late January 2026, the average 2-year fixed was 4.24% (with best-buy deals hitting as low as 3.45%) and average 5-year fixed 4.35% (with best-buy deals around 3.67%)
Looking Ahead
The next Monetary Policy Committee (MPC) meeting is set for 17th March 2026 with many experts predicting the base rate to be cut to 3.50%. While the “price war” is fuelling momentum, the market remains sensitive to inflation data. If inflation proves stubborn (currently sitting around 3.4%), the pace of Base Rate cuts may slow, causing fixed rates to plateau.
One of the most critical themes this year is the massive volume of expiring deals. Approximately 1.8 million fixed-rate mortgages are due to end in 2026. The good news is for those who fixed during the post-mini-budget peak of 2022–2023 as they may see their monthly payments decrease when they remortgage. There will be a challenge for borrowers coming off ultra-low “pandemic-era” rates (1%–2%) as they will still face a significant jump in costs.