The housing market forecast for 2026

The housing market at the end of 2025 appeared somewhat up as interest rates in the second half of the year declined consistently. Mortgage acceptance came close to the pre-pandemic norm. House prices slowed sharply in the latter half of the year, which is a good sign for the beginning of the year.

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Remortgaging activity was higher than in previous years, as many people took advantage of pandemic-era low interest rates and are now coming off their 5-year fixed-term rate mortgages.

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Here is a look at the key points of the mortgage market in late 2025:

• Interest rates are falling.
• Mortgage providers are keen to lend with competitive rates.
• House price growth is weakening.
• Remortgaging on the rise.

So that’s what the mortgage market looked like at the end of last year. What do experts forecast for 2026?

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House prices

As expected, most major lenders are expecting house prices to rise in 2026. Halifax has predicted a price rise of around 1-3%, while Rightmove has forecast a 2% rise throughout the year. Affordability isn't something that can be predicted all that well, given varying house prices across the country.

It is expected that house prices will rise more in the north and midlands of the country, more than in London and other southern areas, due to ongoing affordability concerns.

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Mortgage Demand

In 2026, mortgage demand is expected to rise considerably, as financial experts suggest the Bank of England could lower interest rates further in the first quarter of the year, which will likely mean that mortgage rates will drop, and in turn increase demand.

One caveat is that other economic factors could dampen demand in 2026. Buyers being more active in buying doesn’t necessarily mean that affordability pressures will cease to be a factor, and, given the unstable and declining job market, some people will not want to take on the biggest debt of their lives.

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Regional difference

The market varies widely by region, making it extremely difficult to predict the mortgage market as a whole. The trend we have seen in recent years is that mid-priced areas have shown relatively stronger performance than London and the South East.

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Summary of the 2026 mortgage market forecast

• House prices – Expected to rise across 2026 at the rate of around 2-4%.
• Mortgage rates – Optimistically, we hope to see a decrease in rates compared with 2025; however, the market changes all the time, and this cannot be guaranteed.
• Lending activity – modest growth in overall mortgage lending; remortgaging to rise as fixed deals expire from pandemic interest rates.

Please keep in mind that these predictions are opinion-based and should not be taken into financial decision-making. The financial landscape can change for a number of reasons. We recommend consulting a financial adviser before proceeding with any major financial decisions.

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To start your mortgage journey today, get in touch with our advisers!

Tel: 0800 292 2557

Email: hello@hellomortgage.co.uk

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