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 → £1,345p er 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. Average 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 remains 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.”
