The housing market has started the year with renewed momentum, following a quieter close to 2025. Greater mortgage choice and rates lower than those seen last year are helping to support growing confidence in the market.
Interest rates held
Consumer price inflation eased to 3.0% in January, down from 3.4% in December¹, which had marked the first increase after five consecutive months of decline, signalling that the broader downward trend has now resumed. Interest rates were maintained at 3.75% in February, a decision widely expected by economists given the mixed economic backdrop. However, rates are expected to lower over the year with one or potentially two further 0.25 percentage point cuts are expected. Whilst economic growth is expected to be modestly weaker over 2026 (at 1.1%)² this is close to the level that has historically been sufficient to drive positive house price growth.
Mortgage rates continue to ease
Mortgage product choice increased in January to 7,158 options, the highest total since October 2007³. The number of deals available to borrowers with 5% or 10% deposits has also reached an 18-year high, offering a welcome boost for first-time buyers looking to step onto the property ladder. Alongside greater choice, mortgage rates are easing with the latest five-year fixed rate falling to 3.95% - the first time it has been below 4% since September 2022⁴. Lower mortgage rates are helping to fuel the desire to move, while the easing of stress-testing requirements and expectations of further rate cuts are also reducing affordability pressures for borrowers.
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