Mortgage Market Update January 2026: What It Means for You

TL;DR - Key takeaways

• Mortgage rates have remained broadly stable despite recent base rate and inflation changes

• Rates lower: Many homeowners coming to the end of a 2-year fix may find today’s rates are lower than in 2024

• BoE base rate: 3.75% after another cut in December.

• Inflation: Expected to trend down through 2026, supporting longer-term rate stability (December 2025 at 3.4%)

• Buy-to-Let: Buy-to-let lending is becoming more flexible again, with improved affordability options

• Protection corner: A quick review of your home insurance could help avoid underinsurance and unnecessary costs

👉 Bottom line: The market is stabilising, rates are at a sustainable level - and some are predicting the strongest mortgage market in years.

Introduction: A calmer start to 2026

After several years of volatility, many people are asking the same question:

“What’s actually happening with mortgages now?”

The good news is that the mortgage market has entered 2026 in a more settled position. Rates have stabilised, lenders are competing again, and both homeowners and investors are starting to see clearer options.

In this Mortgage Market Update January 2026, we’ll break down:

• Where mortgage rates currently stand

• What the wider economy is telling us

• How the buy-to-let landscape is evolving

• Why reviewing your protection matters just as much as your mortgage

All explained in plain English, so you can make confident, informed decisions.

Mortgage Market Update January 2026:

Rates at a Glance

Mortgage rates have shown very little movement over the past couple of months.

This is notable because:

• The Bank of England Base Rate was cut in December 2025

• New inflation figures were released shortly afterwards

Despite this, lenders had largely priced these changes in already. As a result, product pricing has remained steady rather than swinging up or down.

What this means for homeowners

If your mortgage is due to end in 2026:

• Many 2-year fixed rates taken in 2024 were higher than today’s equivalent deals

• You may be in a better position than you expect

We always recommend reviewing options around 6 months before your deal ends. This allows time to secure a new rate early and switch again if something better appears later.

UK Economic Update:

Base Rate and Inflation in Plain English

The Bank of England Base Rate currently sits at 3.75%, following its cut in December 2025.

The next Monetary Policy Committee meeting is in early February. At present:

• No further reduction is widely expected immediately

• Policymakers want to see clearer evidence that inflation is firmly falling

Inflation snapshot

• December 2025 inflation: 3.4%

• Previous month: 3.2%

• Forecast: around 3% by March 2026, with further gradual declines through the year

Why this matters for mortgages

Mortgage pricing is driven more by expectations of future inflation than by today’s base rate alone.

If inflation continues to cool as forecast:

• Lenders gain confidence in longer-term stability

• This supports more competitive fixed-rate pricing

In short: fewer shocks usually mean fewer sudden rate jumps.

Housing Market Trends: Prices, Buyers, and Sellers

The UK housing market has seen a typical “new year bounce”.

Average asking prices for properties listed in early 2026 are up by almost £10,000 compared with late 2025.

For sellers

• Encouraging signs of buyer activity

• Sensible pricing remains key to achieving a sale

For buyers

Trying to time the market rarely works.

Over the long term:

• House prices have consistently risen

• Ownership is more about affordability and sustainability than perfect timing

If you’re thinking about buying, the most useful starting point is understanding:

What could I comfortably afford today?

Once you know that, you can move forward with clarity.

Buy-to-Let Market Update January 2026:

A More Flexible Landscape

The buy-to-let sector continues to evolve, and lenders are adapting.

We are currently seeing:

• Lower stress-testing in some cases

• Use of surplus personal income (top-slicing)

• Improved options for limited company landlords

• Stronger support for HMOs and multi-unit properties

Energy efficiency matters more than ever

Many lenders now offer:

• Preferential rates for higher EPC-rated properties

• Incentives for energy-efficient homes

This reflects the growing importance of sustainability in property lending.

Market fundamentals

• Rental demand remains strong in many regions

• Yields are holding up despite higher costs

• Investors are focusing more on long-term income than short-term gains

The right lender choice can make a meaningful difference to affordability and future flexibility.

Remortgaging in 2026

Why Early Planning Pays

Whether residential or buy-to-let, remortgaging is no longer a “set and forget” exercise.

A structured review can help:

• Reduce monthly payments

• Improve cash flow

• Release funds for other goals

• Secure longer-term certainty

Starting early gives you options. Leaving it late often limits them.

Protection Corner

Is Your Home Insurance Still Fit for Purpose?

Buildings and contents insurance is easy to overlook.

But life changes:

• Home improvements

• New furniture or valuables

• Working from home

• Rising rebuild costs

All can mean your existing cover is no longer suitable.

The risk of underinsurance

If your sums insured are too low:

• Claims may be reduced

• You could be left covering part of the cost yourself

Policies also differ widely in:

• Accidental damage cover

• Excess levels

• Home emergency options

• Cover away from the home

A short review can highlight gaps and ensure you’re not paying more than necessary

The Wealth Architect Approach: Strategy Before Products

At Turkington Davis, we don’t simply arrange mortgages or policies.

We design joined-up strategies that connect:

• Your home

• Your borrowing

• Your protection

• Your long-term plans

The aim is simple: help you turn today’s decisions into lasting financial security.

FAQs

Should I fix my mortgage now or wait?

It depends on your budget, how long you plan to stay put, and how comfortable you are with payment changes. Fixing gives certainty; tracker/variable options may offer flexibility. A personalised review helps you choose what fits your situation.

How early can I secure a new mortgage rate?

Many lenders allow you to secure a new rate up to around six months before your current deal ends. This can protect you from rate increases while leaving room to switch again if something better appears.

Are buy-to-let mortgages harder to obtain now?

Buy-to-let is more selective than it once was, but strong cases are well supported. The right lender choice matters—especially for limited companies, portfolio landlords, and more complex property types.

Do EPC ratings affect buy-to-let mortgage rates?

Increasingly, yes. Some lenders offer preferential rates or incentives for more energy-efficient properties. This can be a useful lever when reviewing a portfolio or planning improvements.

How often should I review my home insurance?

At least once a year, and whenever you make changes like renovations, buying new valuables, or switching to working from home. Rebuild costs can change over time, and underinsurance is a common issue.

Can you help first-time buyers as well as investors?

Yes. We support first-time buyers, homeowners, landlords, and business owners—building a clear plan around affordability, protection, and long-term goals.

What does “independent advice” mean in practice?

It means recommendations aren’t limited to one lender or insurer. The aim is to select solutions that fit your needs—based on evidence, value, and suitability.

Further Reading & References

If you found this update useful, you might also enjoy:

🔹 From Turkington Davis

• The First-Time Buyer Guide
  A step-by-step guide to navigating your first purchase with confidence.

• Remortgaging
  Plan at least 6 months in advance, learn more and book a review today.

• The First-Time Buyer Guide
  A step-by-step guide to navigating your first purchase with confidence.

• The Home Mover’s Mortgage Guide
  Understand your options when upsizing, downsizing, or relocating.

• How to Protect Your Family’s Financial Future
  An introduction to life insurance, explained in plain English.

🔹 Authoritative External Sources

(We only link to trusted, non-commercial sources to keep our readers informed.)

• Moneyfacts Mortgage Trends — mortgages and home buying information.

• Bank of England base rate - current interest rates decision

• Office for National Statistics – Inflation and Price Indices — the latest UK inflation data.

🔹 Relevant Articles

• Money Week - Uk Inflation Live

• Home Owners Alliance - Mortgage Rate Predictions 2026

• Office of National Statistics - Inflation and Price Indices

• Mortgage Solutions - Brokers and lenders ‘increasingly optimistic’ for BTL market trajectory in 2026

Whether you’re planning ahead or just want a quick chat, get in touch today.

Independent, FCA-authorised financial and mortgage advisors | Trusted by Home Buyers across the UK

Your home may be repossessed if you do not keep up repayments on your mortgage.