With four base rate cuts, changes to stamp duty and lenders allowing consumers to borrow more, 2025 was an eventful year in the mortgage and property world.
But now let’s look ahead to 2026.
Here, Which? explains why mortgage rates are likely to fall, house prices are expected to rise and what regulatory changes could mean for your home purchase or sale.
1. House prices will continue to rise… slowly
Experts agree that house prices will continue to creep up in 2026. Here’s what they predict:
- Zoopla: 1.5%
- Rightmove: 2%
- Savills: 2%
- Hamptons: 2.5%
- Knight Frank: 3%
- Nationwide: 2-4%
Exact estimates vary, ranging from a modest 1.5% to an optimistic 4%.
Property portal Zoopla is predicting the most modest bump at 1.5%. Richard Donnell, executive director at Zoopla, explains: ‘There remain plenty of homes for sale, which will boost buyer choice as we start the new year. Average UK house prices are projected to be 1.5% higher over 2026, with a continued divide between southern England and the rest of the country, where affordability is better, and buying costs are lower.’
Major mortgage lender Nationwide is the most optimistic, as the Budget was less painful for the market than anticipated. It said: ‘The changes to property taxes announced in the Budget are unlikely to have a significant impact on the market.’ This is because ‘the high value council tax surcharge is not being introduced until April 2028 and will apply to less than 1% of properties in England and around 3% in London’.
Many believe there is pent-up demand after falling buyer confidence ahead of the Budget, with many consumers delaying moves until greater certainty over tax changes. Now that the Budget has passed, there is plenty of choice for buyers, with the number of homes for sale still at a decade-high level.
- Find out more: what’s happening to house prices?
2. Borrowers will see lower rates
In 2025, the Bank of England cut the base rate four times, from 4.75% to 3.75%. As a result, the best mortgage rates fell from around 4.1% in January to just above 3.5% in December.
Experts expect mortgage rates to continue to fall in 2026. This is good news for the 1.8m fixed-rate mortgages that are due to end next year.
Lloyd Cochrane, head of mortgages proposition at NatWest Group, said: ‘The Bank of England’s decision to cut the base rate of interest by 0.25% [in December] will understandably raise hopes of additional cuts to come into 2026. The market expects additional interest rate cuts in 2026, but this will clearly hinge on factors such as reduced inflation and signs of economic growth.’
Estate agent Hamptons expects inflation to fall faster than previously forecast. It predicts this will lead to two or three base rate cuts in 2026, taking the base rate to 3.25% by the end of the year. Hamptons also believes that typical mortgage rates will stabilise at around 4%.
Barclays Research is more cautious. It forecasts just one base rate cut in 2026, most likely in March. If there is only a single cut in 2026, mortgage rates are likely to edge lower, but it says consumers should not expect any significant reductions.
- Find out more: best mortgage rates 2026
3. Mortgage market reform will continue
In 2025, the Financial Conduct Authority (FCA) reformed lending criteria on mortgages.
Previously, lenders were limited to issuing 15% of new mortgages at more than 4.5 times a borrower’s salary. Under the updated rules, individual lenders will be allowed to exceed this 15% limit, although the overall cap will remain in place across the wider market.
The FCA has announced that it will consult on further changes in 2026 and will aim to have the first rule changes in place by the end of the year.
The regulator will focus on four areas:
- first-time buyers and underserved consumers
- later-life lenders
- innovation and disclosure
- protecting vulnerable consumers.
The FCA will consider changes that will simplify mortgage rules to support more flexible products that reflect different working patterns and income levels at different stages of life. Plus, it will explore ways to improve advice to help people confidently plan for later life.
David Geale, executive director for payments and digital finance, said: ‘We’ll use insight from consumers and industry to drive further reforms and rebalance risk – helping to widen access to affordable mortgages to meet the needs of consumers today.
‘Reforming the mortgage market can help address the fact that as a society we’re saving too little for later life, yet people have huge wealth tied up in property.’
- Find out more: how to find the best estate agent
4. Homebuying reforms on the way
It’s well established how frustrating the process of buying a property in England, Wales and Northern Ireland is.
The government has set out three key changes that aim to improve the way the property market functions:
- Sellers and estate agents will be required to provide buyers with more details about a property upfront.
- Plans are being explored to make property transactions more secure earlier in the process. Buyers and sellers could choose to sign binding conditional contracts that include a financial penalty if one party pulls out after an offer has been accepted.
- The government is also consulting on introducing mandatory qualifications and a new code of practice for estate, letting and managing agents.
The consultation, launched by the Ministry of Housing, Communities and Local Government, ended just before Christmas.
Once responses have been reviewed, the government plans to publish a roadmap in 2026, setting out how and when reforms could be introduced.
It is expected that the government will move towards the process in Scotland, where valuations and surveys are provided upfront as part of a seller’s home report. Research has shown this leads to fewer failed transactions and faster completions.
- Find out more: homebuying reforms: what the government’s plans mean for you