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After years of disruption, the market found its footing in 2025, setting the stage for a more confident 2026, says Jon Cooper, Director of Mortgages at Aldermore.
From Covid to the cost-of-living crisis, the 2020s have been tough but 2025 felt different. Not exciting or dramatic, just steadier. In the context of the past few years, it’s been refreshingly boring.
After years of firefighting, 2025 finally gave the mortgage market room to breathe, creating a foundation for a more predictable 2026.
The Bank of England has already cut the Base Rate to 3.75% from its 2023 peak of 5.25%, and with one more MPC meeting before year-end, markets expect another reduction.
Most forecasters now expect Base Rate to end 2026 at around 3.25%, with Hamptons predicting two or three cuts next year as inflation falls faster than previously anticipated. Mortgage pricing has followed suit. Nobody expects a return to the ultra-low deals of the late 2010s, but average fixed rates drifting closer to 4% will be very welcome.
A calmer market doesn’t automatically make things easier.
Most of the experts now expect house prices to edge up slowly in 2026, rather than going anywhere dramatic. Whether it’s Savills, Hamptons, Nationwide, Halifax or the Office for Budget Responsibility, the message is broadly the same - low single-digit growth.
The same applies to activity levels. People are still moving, but mainly when they have to. UK Finance expects around 1.2 million transactions next year, slightly down on 2025, which fits with what many brokers are already seeing: a market that’s ticking over, not racing ahead. House purchase lending is expected to rise by just 2% next year.
Taken together, it feels like things have found a balance. There’s enough confidence for buyers and sellers to act when needed, but their decisions are often driven by life events rather than optimism.
As large numbers of borrowers reached the end of fixed rate deals, refinancing activity rose sharply through 2025. UK Finance estimates that remortgaging reached £71bn over the year, while product transfers rose to £256bn, making up the lion’s share of refinancing activity.
Four in every five pounds of refinancing business went through product transfers rather than borrowers switching lenders. That’s not surprising after the past few years, with high rates, limited options and stretched affordability. Speed and certainty mattered most, and they still do for many borrowers.
And the remortgaging wave isn’t over yet. Around 1.8 million fixed rate mortgages are due to end in 2026, many taken out when rates were far lower than they are today. UK Finance expects refinancing volumes to keep rising next year, with remortgaging forecast to grow to £77bn and product transfers increasing again to £261bn.
For some borrowers, the impact will be painful. Those coming off low fixed deals taken out five years ago will need to accept higher monthly repayments. But others rolling off 2023-24 fixes at 5-6% may actually see their monthly payments fall.
They’ll all need your help making sense of their options.
The pressures seen in the remortgage market are also evident in the private rented sector. Landlords have faced a challenging period, shaped by tax changes, regulatory reform, EPC requirements and the adjustment to higher rates.
But 2025 also marked a turning point. After years of retrenchment, the buy to let market showed clear signs of recovery. In its latest report, IMLA states that buy to let lending reached an estimated £39bn in 2025, around 15% higher than 2024, suggesting that confidence is gradually returning to the sector.
That recovery has been broad-based. House purchase lending rose by 10% to £11bn, while buy to let remortgages increased by 16% to £26.5bn, reflecting both renewed investment activity and landlords taking advantage of greater pricing stability to restructure their borrowing.
Crucially, demand fundamentals remain strong. The supply of rental homes is still constrained, tenant demand continues to outstrip availability, and most forecasts point to rents rising through 2026 – albeit at a more sustainable pace than in recent years. For many landlords, this provides a more supportive backdrop than they’ve experienced for some time.
Buy to let has undoubtedly become more specialist, but that isn’t necessarily a negative. Portfolio landlords are increasingly focused on long-term performance and resilience, and are looking for lenders who can take a holistic view rather than assessing each property in isolation.
At Aldermore, our multi-property mortgages allow landlords to consolidate up to 30 properties under a single account. We assess affordability across entire portfolios, supporting landlords where individual properties may not meet standard stress tests on their own. Our HMO range has also improved, with lower interest coverage ratios and higher loan limits.
As the market steadies, our focus is on giving brokers the tools and flexibility to support landlords who are adapting, investing carefully and positioning themselves for the next phase of growth in the buy-to-let sector.
First-time buyers are still under pressure, spending around 22.5% of their gross income on mortgage payments, close to the highest level seen in the past two decades.
There’s growing recognition that the market hasn’t always kept pace with how people actually earn and live. The regulator has now confirmed it will focus on improving access for first-time buyers and underserved groups in 2026, looking at high loan-to-income lending, interest-only and part-and-part mortgages, and how lenders assess variable or irregular income, such as for the self-employed and contractors.
Aldermore is already supporting these groups. We’ve modernised affordability assessments, increased maximum loan sizes and broadened criteria for discounted purchase routes. For self-employed borrowers, contractors or those with historic, minor credit issues, our flexible underwriting allows a more personal approach, helping us to say yes where it’s responsible to do so.
2026 won’t be a year of big headlines, but it will be busy and sometimes tricky, with so many borrowers refinancing and affordability still tight.
The real value will be in steady, practical mortgage advice, and our commitment to brokers is simple: to stay flexible and adapt what we offer, so we can help more of your clients reach their goals.
IF YOUR CLIENT FAILS TO KEEP UP PAYMENTS ON THEIR MORTGAGE THEIR PROPERTY MAY BE REPOSSESSED.